T
|
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
|
58-1954497
|
(State or other jurisdiction
of incorporation or organization)
|
(IRS Employer Identification Number)
|
8302 Dunwoody Place, Suite 250, Atlanta, GA
|
30350
|
(Address of principal executive offices)
|
(Zip Code)
|
N/A
|
Large accelerated filer
£
|
Accelerated Filer
T
|
Non-accelerated Filer
£
|
Smaller reporting company
£
|
Class
|
Outstanding at May 2, 2013
|
|||
Common Stock, $.001 Par Value
|
56,334,063
|
|||
shares of registrant’s
|
||||
Common Stock
|
PART I
|
FINANCIAL INFORMATION
|
Page No.
|
Item 1.
|
Financial Statements (Unaudited)
|
|||
1
|
||||
3
|
||||
4
|
||||
5
|
||||
6
|
||||
Item 2.
|
19
|
|||
Item 3.
|
31
|
|||
Item 4.
|
31
|
PART II
|
OTHER INFORMATION
|
Item 1.
|
32
|
||
Item 1A.
|
32
|
||
Item 6.
|
32
|
March 31,
|
December 31,
|
|||||||
(Amounts in Thousands, Except for Share and per Share Amounts)
|
2013
|
2012
|
||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash
|
$ | 2,251 | $ | 4,368 | ||||
Restricted cash
|
35 | 35 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $2,207 and $2,507, respectively
|
10,600 | 11,395 | ||||||
Unbilled receivables - current
|
6,118 | 8,530 | ||||||
Retainage receivable
|
397 | 312 | ||||||
Inventories
|
447 | 473 | ||||||
Prepaid and other assets
|
2,985 | 3,282 | ||||||
Deferred tax assets - current
|
2,999 | 1,553 | ||||||
Current assets related to discontinued operations
|
600 | 499 | ||||||
Total current assets
|
26,432 | 30,447 | ||||||
Property and equipment:
|
||||||||
Buildings and land
|
26,297 | 26,297 | ||||||
Equipment
|
34,654 | 34,657 | ||||||
Vehicles
|
661 | 661 | ||||||
Leasehold improvements
|
11,624 | 11,625 | ||||||
Office furniture and equipment
|
2,119 | 2,116 | ||||||
Construction-in-progress
|
447 | 334 | ||||||
75,802 | 75,690 | |||||||
Less accumulated depreciation and amortization
|
(41,498 | ) | (40,376 | ) | ||||
Net property and equipment
|
34,304 | 35,314 | ||||||
Property and equipment related to discontinued operations
|
1,616 | 1,614 | ||||||
Intangibles and other long term assets:
|
||||||||
Permits
|
16,787 | 16,799 | ||||||
Goodwill
|
29,186 | 29,186 | ||||||
Other intangible assets – net
|
3,459 | 3,610 | ||||||
Unbilled receivables – non-current
|
85 | 137 | ||||||
Finite risk sinking fund
|
21,281 | 21,272 | ||||||
Deferred tax asset, net of liabilities
|
1,103 | 1,103 | ||||||
Other assets
|
1,512 | 1,549 | ||||||
Total assets
|
$ | 135,765 | $ | 141,031 |
March 31,
|
December 31,
|
|||||||
(Amounts in Thousands, Except for Share and per Share Amounts)
|
2013
|
2012
|
||||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 8,179 | $ | 8,657 | ||||
Accrued expenses
|
6,025 | 6,254 | ||||||
Disposal/transportation accrual
|
1,091 | 2,294 | ||||||
Unearned revenue
|
3,114 | 3,695 | ||||||
Billings in excess of costs and estimated earnings
|
1,657 | 1,934 | ||||||
Current liabilities related to discontinued operations
|
1,724 | 1,512 | ||||||
Current portion of long-term debt
|
2,686 | 2,794 | ||||||
Total current liabilities
|
24,476 | 27,140 | ||||||
Accrued closure costs
|
11,387 | 11,349 | ||||||
Other long-term liabilities
|
691 | 674 | ||||||
Long-term liabilities related to discontinued operations
|
1,612 | 1,829 | ||||||
Long-term debt, less current portion
|
11,779 | 11,402 | ||||||
Total long-term liabilities
|
25,469 | 25,254 | ||||||
Total liabilities
|
49,945 | 52,394 | ||||||
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 plus accrued and unpaid dividends of $691 and $674, respectively
|
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, 56,310,859 and 56,238,525 shares issued, respectively; 56,272,649 and 56,200,315 shares outstanding, respectively
|
56 | 56 | ||||||
Additional paid-in capital
|
102,919 | 102,819 | ||||||
Accumulated deficit
|
(18,917 | ) | (16,005 | ) | ||||
Accumulated other comprehensive loss
|
(4 | ) | (2 | ) | ||||
Less Common Stock in treasury, at cost; 38,210 shares
|
(88 | ) | (88 | ) | ||||
Total Perma-Fix Environmental Services, Inc. stockholders' equity
|
83,966 | 86,780 | ||||||
Non-controlling interest
|
569 | 572 | ||||||
Total stockholders' equity
|
84,535 | 87,352 | ||||||
Total liabilities and stockholders' equity
|
$ | 135,765 | $ | 141,031 |
Three Months Ended March 31,
|
||||||||
(Amounts in Thousands, Except for Per Share Amounts)
|
2013
|
2012
|
||||||
Net revenues
|
$ | 19,829 | $ | 37,936 | ||||
Cost of goods sold
|
19,292 | 33,567 | ||||||
Gross profit
|
537 | 4,369 | ||||||
Selling, general and administrative expenses
|
4,186 | 5,038 | ||||||
Research and development
|
499 | 353 | ||||||
Loss on disposal of property and equipment
|
2 | ― | ||||||
Loss from operations
|
(4,150 | ) | (1,022 | ) | ||||
Other income (expense):
|
||||||||
Interest income
|
9 | 15 | ||||||
Interest expense
|
(145 | ) | (221 | ) | ||||
Interest expense-financing fees
|
(23 | ) | (34 | ) | ||||
Other
|
(8 | ) | ― | |||||
Loss from continuing operations before taxes
|
(4,317 | ) | (1,262 | ) | ||||
Income tax benefit
|
(1,429 | ) | (455 | ) | ||||
Loss from continuing operations, net of taxes
|
(2,888 | ) | (807 | ) | ||||
Loss from discontinued operations, net of taxes
|
(27 | ) | (138 | ) | ||||
Net loss
|
(2,915 | ) | (945 | ) | ||||
Net (loss) income attributable to non-controlling interest
|
(3 | ) | 56 | |||||
Net loss attributable to Perma-Fix Environmental Services, Inc. common stockholders
|
$ | (2,912 | ) | $ | (1,001 | ) | ||
Net loss per common share attributable to Pema-Fix Environmental Services, Inc. stockholders - basic:
|
||||||||
Continuing operations
|
$ | (.05 | ) | $ | (.02 | ) | ||
Discontinued operations
|
― | ― | ||||||
Net loss per common share
|
$ | (.05 | ) | $ | (.02 | ) | ||
Net loss per common share attributable to Pema-Fix Environmental Services, Inc. stockholders - diluted:
|
||||||||
Continuing operations
|
$ | (.05 | ) | $ | (.02 | ) | ||
Discontinued operations
|
― | ― | ||||||
Net loss per common share
|
$ | (.05 | ) | $ | (.02 | ) | ||
Number of common shares used in computing net loss per share:
|
||||||||
Basic
|
56,272 | 56,062 | ||||||
Diluted
|
56,272 | 56,062 |
Three Months Ended March 31,
|
||||||||
(Amounts in Thousands)
|
2013
|
2012
|
||||||
Net loss
|
$ | (2,915 | ) | $ | (945 | ) | ||
Other comprehensive (loss) income:
|
||||||||
Foreign currency translation (loss) gain
|
(2 | ) | 12 | |||||
Total other comprehensive (loss) income
|
(2 | ) | 12 | |||||
Comprehensive loss
|
(2,917 | ) | (933 | ) | ||||
Comprehensive (loss) income attributable to non-controlling interest
|
(3 | ) | 56 | |||||
Comprehensive loss attributable to Perma-Fix Environmental Services, Inc. stockholders
|
$ | (2,914 | ) | $ | (989 | ) |
Three Months Ended
|
||||||||
March 31,
|
||||||||
(Amounts in Thousands)
|
2013
|
2012
|
||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$ | (2,915 | ) | $ | (945 | ) | ||
Less: loss from discontinued operations, net of taxes
|
(27 | ) | (138 | ) | ||||
Loss from continuing operations, net of taxes
|
(2,888 | ) | (807 | ) | ||||
Adjustments to reconcile net loss to cash used in operations:
|
||||||||
Depreciation and amortization
|
1,287 | 1,392 | ||||||
Amortization of debt discount
|
― | 10 | ||||||
Amortization of fair value of customer contracts
|
(422 | ) | (1,062 | ) | ||||
Deferred tax benefit
|
(1,432 | ) | (526 | ) | ||||
Provision for bad debt and other reserves
|
5 | 42 | ||||||
Foreign exchange (loss) gain
|
(2 | ) | 12 | |||||
Loss on disposal of plant, property and equipment
|
2 | ― | ||||||
Issuance of common stock for services
|
49 | 51 | ||||||
Stock-based compensation
|
51 | 64 | ||||||
Changes in operating assets and liabilities of continuing operations, net of effect from business acquisitions:
|
||||||||
Accounts receivable
|
704 | (1,460 | ) | |||||
Unbilled receivables
|
2,464 | (1,908 | ) | |||||
Prepaid expenses, inventories and other assets
|
548 | 936 | ||||||
Accounts payable, accrued expenses and unearned revenue
|
(2,479 | ) | (4,659 | ) | ||||
Cash used in continuing operations
|
(2,113 | ) | (7,915 | ) | ||||
Cash used in discontinued operations
|
(139 | ) | (187 | ) | ||||
Cash used in operating activities
|
(2,252 | ) | (8,102 | ) | ||||
Cash flows from investing activities:
|
||||||||
Purchases of property and equipment, net
|
(116 | ) | (206 | ) | ||||
Change in restricted cash, net
|
― | 1,500 | ||||||
Payment to finite risk sinking fund
|
(9 | ) | (1,892 | ) | ||||
Cash used in investing activities
|
(125 | ) | (598 | ) | ||||
Cash flows from financing activities:
|
||||||||
Net borrowing of revolving credit
|
988 | ― | ||||||
Principal repayments of long term debt
|
(719 | ) | (1,152 | ) | ||||
Proceeds from finite risk financing
|
― | 565 | ||||||
Payment of finite risk financing
|
― | (63 | ) | |||||
Cash provided by (used in) financing activities of continuing operations
|
269 | (650 | ) | |||||
Principal repayments of long term debt for discontinued operations
|
(9 | ) | (8 | ) | ||||
Cash provided by (used in) financing activities
|
260 | (658 | ) | |||||
Decrease in cash
|
(2,117 | ) | (9,358 | ) | ||||
Cash at beginning of period
|
4,368 | 12,055 | ||||||
Cash at end of period
|
$ | 2,251 | $ | 2,697 | ||||
Supplemental disclosure:
|
||||||||
Interest paid
|
$ | 155 | $ | 219 | ||||
Income taxes paid
|
25 | 470 |
1.
|
Basis of Presentation
|
2.
|
Summary of Significant Accounting Policies
|
3.
|
Business Acquisition
|
|
·
|
the note, dated October 31, 2011 (“October Note”), with a principal balance of approximately $1,460,000, was cancelled, terminated and rendered null and void. The October Note of $2,500,000 was issued on October 31, 2011, as partial consideration of the purchase price;
|
|
·
|
the Company issued to TNC a new, two-year, non-negotiable, unsecured promissory note in the principal amount of approximately $230,000 (the “New Note”) in replacement of the October Note. The New Note bears an annual interest rate of 6%, payable in 24 monthly installments of principal and interest of approximately $10,000, with first payment due and paid on February 28, 2013;
|
|
·
|
the remaining Escrow Balance of $500,000 was released to TNC. A sum of $2,000,000 was deposited into an escrow account at October 31, 2011 to satisfy certain claims that we may have against TNC for indemnification pursuant to the Purchase Agreement and the Escrow Agreement. TNC and SEHC further agreed that if certain conditions were not met by December 31, 2011, relating to a certain contract, then the Company could withdraw $1,500,000 from the escrow account. We received $1,500,000 from the escrow on January 10, 2012 as certain conditions were not met under this contract;
|
|
·
|
the Parties terminated all of their rights and obligations to indemnification under the Purchase Agreement, except with respect to TNC’s covenants relating to non-compete, non-solicitation of customers and employees, confidentiality, and related remedies which will continue in full force and effect in accordance with the terms of the Purchase Agreement (the “Continuing Covenants”);
|
|
·
|
the Parties terminated their rights and obligations with respect to (i) the representations, warranties, and covenants contained in the Purchase Agreement, except for the Continuing Covenants; and
|
|
·
|
the Company terminated its contractual right to offset amounts owing to TNC under the Purchase Agreement to satisfy claims against TNC.
|
4.
|
Loss Per Share
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
(Amounts in Thousands, Except for Per Share Amounts)
|
2013
|
2012
|
||||||
Loss per share from continuing operations attributable to Perma-Fix Environmental Services, Inc. common stockholders
|
||||||||
Loss from continuing operations
|
$ | (2,888 | ) | $ | (807 | ) | ||
Basic loss per share
|
$ | (.05 | ) | $ | (.02 | ) | ||
Diluted loss per share
|
$ | (.05 | ) | $ | (.02 | ) | ||
Loss per share from discontinued operations attributable to Perma-Fix Environmental Services, Inc. common stockholders
|
||||||||
Loss from discontinued operations
|
$ | (27 | ) | $ | (138 | ) | ||
Basic loss per share
|
$ | ─ | $ | ─ | ||||
Diluted loss per share
|
$ | ─ | $ | ─ | ||||
Weighted average common shares outstanding – basic
|
56,272 | 56,062 | ||||||
Potential shares exercisable under stock option plans
|
─ | ─ | ||||||
Weighted average common shares outstanding – diluted
|
56,272 | 56,062 | ||||||
Potential shares excluded from above weighted average share calculations due to their anti-dilutive effect include:
|
||||||||
Upon exercise of options
|
2,234 | 1,827 |
5.
|
Other Intangible Assets
|
March 31, 2013
|
December 31, 2012
|
|||||||||||||||||||||||||||
Useful
|
Gross
|
Net
|
Gross
|
Net
|
||||||||||||||||||||||||
Lives
|
Carrying
|
Accumulated
|
Carrying
|
Carrying
|
Accumulated
|
Carrying
|
||||||||||||||||||||||
(Years)
|
Amount
|
Amortization
|
Amount
|
Amount
|
Amortization
|
Amount
|
||||||||||||||||||||||
Intangibles (amount in thousands)
|
||||||||||||||||||||||||||||
Patent
|
8-18 | $ | 453 | $ | (119 | ) | $ | 334 | $ | 453 | $ | (105 | ) | $ | 348 | |||||||||||||
Software
|
3 | 380 | (172 | ) | 208 | 380 | (145 | ) | 235 | |||||||||||||||||||
Non-compete agreement
|
5 | 265 | (75 | ) | 190 | 265 | (62 | ) | 203 | |||||||||||||||||||
Customer contracts
|
0.5 | 790 | (790 | ) | ¾ | 790 | (790 | ) | ¾ | |||||||||||||||||||
Customer relationships
|
12 | 3,370 | (643 | ) | 2,727 | 3,370 | (546 | ) | 2,824 | |||||||||||||||||||
Total
|
$ | 5,258 | $ | (1,799 | ) | $ | 3,459 | $ | 5,258 | $ | (1,648 | ) | $ | 3,610 |
The following table summarizes the expected amortization over the next five years for our definite-lived intangible assets noted above and also includes the only definite-lived permit, which is at our Diversified Scientific Services, Inc. (“DSSI”) subsidiary:
|
Amount
|
||||
Year
|
(In thousands)
|
|||
2013 (remaining)
|
$ | 506 | ||
2014
|
590 | |||
2015
|
507 | |||
2016
|
429 | |||
2017
|
355 | |||
$ | 2,387 |
6.
|
Stock Based Compensation
|
Three Months Ended
|
||||||||
Stock Options
|
March 31,
|
|||||||
2013
|
2012
|
|||||||
Employee Stock Options
|
$ | 33,000 | $ | 38,000 | ||||
Director Stock Options
|
18,000 | 26,000 | ||||||
Total
|
$ | 51,000 | $ | 64,000 |
7.
|
Stock Plans and Non-Qualified Option Agreement
|
Weighted Average
|
Aggregate
|
|||||||||||||||
Weighted Average
|
Remaining
|
Intrinsic
|
||||||||||||||
Shares
|
Exercise Price
|
Contractual Term
|
Value
|
|||||||||||||
Options outstanding Janury 1, 2013
|
2,644,000 | $ | 1.96 | |||||||||||||
Granted
|
─
|
─
|
||||||||||||||
Exercised
|
─
|
─
|
$ |
─
|
||||||||||||
Forfeited
|
(410,000 | ) | 2.17 | |||||||||||||
Options outstanding End of Period
(1)
|
2,234,000 | 1.93 | 3.8 | $ |
─
|
|||||||||||
Options Exercisable at March 31, 2013
(1)
|
1,846,500 | $ | 2.02 | 3.3 | $ |
─
|
||||||||||
Options Vested and expected to be vested at March 31, 2013
|
2,234,000 | $ | 1.93 | 3.8 | $ |
─
|
Weighted Average
|
Aggregate
|
|||||||||||||||
Weighted Average
|
Remaining
|
Intrinsic
|
||||||||||||||
Shares
|
Exercise Price
|
Contractual Term
|
Value
|
|||||||||||||
Options outstanding Janury 1, 2012
|
3,039,833 | $ | 1.98 | |||||||||||||
Granted
|
─
|
─
|
||||||||||||||
Exercised
|
─
|
─
|
$ |
─
|
||||||||||||
Forfeited
|
(422,833 | ) | 1.90 | |||||||||||||
Options outstanding End of Period
(2)
|
2,617,000 | 1.99 | 4.1 | $ | 47,100 | |||||||||||
Options Exercisable at March 31, 2012
(2)
|
2,067,000 | $ | 2.13 | 3.2 | $ | 41,100 | ||||||||||
Options Vested and expected to be vested at March 31, 2012
|
2,617,000 | $ | 1.99 | 4.1 | $ | 47,100 |
(1)
|
Options with exercise prices ranging from $1.10 to $2.95
|
(2)
|
Options with exercise prices ranging from $1.41 to $2.95
|
8.
|
Long Term Debt
|
(Amounts in Thousands)
|
March 31,
2013
|
December 31,
2012
|
||||||
Revolving Credit
facility dated October 31, 2011, borrowings based upon eligible accounts receivable, subject to monthly borrowing base calculation, variable interest paid monthly at our option of prime rate (3.25% at March 31, 2013) plus 2.0% or London Interbank Offer Rate ("LIBOR") plus 3.0%, balance due October 31, 2016. Effective interest rate for first quarter of 2013 was 5.25%.
(1)
|
$ | 988 | $ | — | ||||
Term Loan
dated October 31, 2011, payable in equal monthly installments of principal of $190, balance due in October 31, 2016, variable interest paid monthly at option of prime rate plus 2.5% or LIBOR plus 3.5%. Effective interest rate for first quarter 2013 was 3.75%.
(1)
|
12,952 | 13,524 | ||||||
Promissory Note
dated September 28, 2010, payable in 36 monthly equal installments of $40, which includes interest and principal, beginning October 15, 2010, interest accrues at annual rate of 6.0%.
(2)
|
237 | 352 | ||||||
Promissory Note
dated February 12, 2013, payable in monthly installments of $10, which includes interest and principal, starting February 28, 2013, interest accrues at annual rate of 6.0%, balance due January 31, 2015.
(2)
|
211 | — | ||||||
Various capital lease and promissory note obligations
, payable 2013 to 2014, interest at rates ranging from 5.2% to 8.0%.
|
139 | 391 | ||||||
14,527 | 14,267 | |||||||
Less current portion of long-term debt
|
2,686 | 2,794 | ||||||
Less long-term debt related to assets held for sale
|
62 | 71 | ||||||
$ | 11,779 | $ | 11,402 |
(1)
|
Our Revolving Credit facility is collateralized by our accounts receivable and our Term Loan is collateralized by our property, plant, and equipment.
|
(2)
|
Uncollateralized note.
|
|
·
|
up to $25,000,000 revolving credit facility (“Revolving Credit”), subject to the amount of borrowings based on a percentage of eligible receivables. The revolving credit advances are subject to limitations of an amount up to the sum of (a) up to 85% of Commercial Receivables aged 90 days or less from invoice date, (b) up to 85% of Commercial Broker Receivables aged up to 120 days from invoice date, (c) up to 85% of acceptable Government Agency Receivables aged up to 150 days from invoice date, and (d) up to 50% of acceptable unbilled amounts aged up to 60 days, less (e) reserves the Agent reasonably deems proper and necessary;
|
|
·
|
a term loan (“Term Loan”) of $16,000,000, which requires monthly installments of approximately $190,000 (based on a seven-year amortization); and
|
|
·
|
equipment line of credit up to $2,500,000, subject to certain limitations.
|
9.
|
Accumulated Other Comprehensive (Loss) Income
|
Foreign
|
||||
Currency
|
||||
(In thousands)
|
Translation
|
|||
Balance at January 1, 2013
|
$ | (2 | ) | |
Other comprehensive loss before reclassification
|
(2 | ) | ||
Amount reclassified from accumulated other comprehensive loss
|
— | |||
Current period other comprehensive loss
|
(2 | ) | ||
Balance at March 31, 2013
|
$ | (4 | ) | |
Balance at January 1, 2012
|
$ | (3 | ) | |
Other comprehensive income before reclassification
|
12 | |||
Amount reclassified from accumulated o
ther comprehensive income
|
— | |||
Current period other comprehensive income
|
12 | |||
Balance at March 31, 2012
|
$ | 9 |
10.
|
Commitments and Contingencies
|
11.
|
Discontinued Operations and Divestitures
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
(Amounts in Thousands)
|
2013
|
2012
|
||||||
Net revenues
|
$ | 663 | $ | 616 | ||||
Interest expense
|
(5 | ) | (9 | ) | ||||
Operating loss from discontinued operations
|
(40 | ) | (208 | ) | ||||
Income tax benefit
|
(13 | ) | (70 | ) | ||||
Loss from discontinued operations
|
(27 | ) | (138 | ) |
March 31,
|
December 31,
|
|||||||
(Amounts in Thousands)
|
2013
|
2012
|
||||||
Accounts receivable, net
(1)
|
$ | 484 | $ | 391 | ||||
Inventories
|
38 | 32 | ||||||
Other assets
|
21 | 16 | ||||||
Property, plant and equipment, net
(2)
|
1,616 | 1,614 | ||||||
Total assets held for sale
|
$ | 2,159 | $ | 2,053 | ||||
Accounts payable
|
$ | 307 | $ | 229 | ||||
Accrued expenses and other liabilities
|
549 | 528 | ||||||
Note payable
|
62 | 71 | ||||||
Environmental liabilities
|
1,374 | 1,373 | ||||||
Total liabilities held for sale
|
$ | 2,292 | $ | 2,201 |
|
(1)
|
net of allowance for doubtful accounts of $25,000 and $45,000 as of March 31, 2013 and December 31, 2012, respectively.
|
|
(2)
|
net of accumulated depreciation of $60,000 for each period presented.
|
March 31,
|
December 31,
|
|||||||
(Amounts in Thousands)
|
2013
|
2012
|
||||||
Other assets
|
$ | 57 | $ | 60 | ||||
Total assets of discontinued operations
|
$ | 57 | $ | 60 | ||||
Accrued expenses and other liabilities
|
$ | 830 | $ | 884 | ||||
Accounts payable
|
15 | 15 | ||||||
Environmental liabilities
|
199 | 241 | ||||||
Total liabilities of discontinued operations
|
$ | 1,044 | $ | 1,140 |
12.
|
Operating Segments
|
|
●
|
from which we may earn revenue and incur expenses;
|
|
●
|
whose operating results are regularly reviewed by the Chief Operating 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, low-level radioactive, mixed waste (containing both hazardous and low-level radioactive constituents), hazardous and non-hazardous waste treatment, processing and disposal services primarily through four uniquely licensed and permitted treatment and storage facilities; and
|
|
-
|
research and development activities to identify, develop and implement innovative waste processing techniques for problematic waste streams.
|
|
-
|
On-site waste management services to commercial and government customers;
|
|
-
|
Technical services, which include:
|
|
o
|
professional radiological measurement and site survey of large government and commercial installations using advance methods, technology and engineering;
|
|
o
|
integrated Occupational Safety and Health services including industrial hygiene (“IH”) assessments; hazardous materials surveys, e.g., exposure monitoring; lead and asbestos management/abatement oversight; indoor air quality evaluations; health risk and exposure assessments; health & safety plan/program development, compliance auditing and training services; and Occupational Safety and Health Administration (“OSHA”) citation assistance;
|
|
o
|
global technical services providing consulting, engineering, project management, waste management, environmental, and decontamination and decommissioning field, technical, and management personnel and services to commercial and government customers; and
|
|
o
|
augmented engineering services (through our Schreiber, Yonley & Associates subsidiary – “SYA”) providing consulting environmental services to industrial and government customers:
|
|
§
|
including air, water, and hazardous waste permitting, air, soil and water sampling, compliance reporting, emission reduction strategies, compliance auditing, and various compliance and training activities; and
|
|
§
|
engineering and compliance support to other segments;
|
|
-
|
Nuclear services, which include:
|
|
o
|
technology-based services including engineering, decontamination and decommissioning (“D&D”), specialty services and construction, logistics, transportation, processing and disposal;
|
|
o
|
remediation of nuclear licensed and federal facilities and the remediation cleanup of nuclear legacy sites. Such services capability includes: project investigation; radiological engineering; partial and total plant D&D; facility decontamination, dismantling, demolition, and planning; site restoration; site construction; logistics; transportation; and emergency response; and
|
|
-
|
A company owned equipment calibration and maintenance laboratory that services, maintains, calibrates, and sources (i.e., rental) of health physics, IH and customized nuclear, environmental, and occupational safety and health (“NEOSH”) instrumentation.
|
Treatment
|
Services
|
Segments
Total
|
Corporate
And Other
(2)
|
Consolidated
Total
|
||||||||||||||||
Revenue from external customers
(3)
|
$ | 7,341 | $ | 12,488 | $ | 19,829 | $ | — | $ | 19,829 | ||||||||||
Intercompany revenues
|
672 | 39 | 711 | ¾ | ¾ | |||||||||||||||
Gross (loss) profit
|
(145 | ) | 682 | 537 | ¾ | 537 | ||||||||||||||
Interest income
|
¾ | ¾ | ¾ | 9 | 9 | |||||||||||||||
Interest expense
|
5 | (5 | ) | ¾ | 145 | 145 | ||||||||||||||
Interest expense-financing fees
|
¾ | ¾ | ¾ | (23 | ) | (23 | ) | |||||||||||||
Depreciation and amortization
|
1,039 | 222 | 1,261 | 26 | 1,287 | |||||||||||||||
Segment loss, net of taxes
|
(888 | ) | (200 | ) | (1,088 | ) | (1,800 | ) | (2,888 | ) | ||||||||||
Segment assets
(1)
|
72,861 | 34,227 | 107,088 | 28,677 | (4) | 135,765 | ||||||||||||||
Expenditures for segment assets
|
116 | ¾ | 116 | ¾ | 116 | |||||||||||||||
Total long-term debt, net of current portion
|
25 | ¾ | 25 | 11,754 | 11,779 |
Treatment
|
Services
|
Segments
Total
|
Corporate
And Other
(2)
|
Consolidated
Total
|
||||||||||||||||
Revenue from external customers
(3)
|
$ | 12,842 | $ | 25,094 | $ | 37,936 | $ | — | $ | 37,936 | ||||||||||
Intercompany revenues
|
609 | 68 | 677 | ¾ | ¾ | |||||||||||||||
Gross profit
|
2,721 | 1,648 | 4,369 | ¾ | 4,369 | |||||||||||||||
Interest income
|
¾ | ¾ | ¾ | 15 | 15 | |||||||||||||||
Interest expense
|
2 | 5 | 7 | 214 | 221 | |||||||||||||||
Interest expense-financing fees
|
¾ | ¾ | ¾ | 34 | 34 | |||||||||||||||
Depreciation and amortization
|
1,130 | 244 | 1,374 | 18 | 1,392 | |||||||||||||||
Segment profit (loss), net of taxes
|
1,093 | 105 | 1,198 | (2,005 | ) | (807 | ) | |||||||||||||
Segment assets
(1)
|
79,171 | 46,687 | 125,858 | 32,741 | (4) | 158,599 | ||||||||||||||
Expenditures for segment assets
|
166 | 38 | 204 | 2 | 206 | |||||||||||||||
Total long-term debt, net of current portion
|
72 | 4 | 76 | 13,204 | 13,280 |
13.
|
Income Taxes
|
14.
|
Related Party Transactions
|
15.
|
Subsequent Event
|
Item
2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
·
|
demand for our services subject to fluctuations due to variety of factors;
|
·
|
uncertainty with the federal budget and sequestration;
|
·
|
significant reduction in the level of governmental funding could have a material adverse impact to our business, financial position, results of operations and cash flows;
|
·
|
expect to meet our financial covenants in remaining quarters of 2013;
|
·
|
ability to improve operations and liquidity;
|
·
|
ability to continue under existing contracts with the federal government (directly or indirectly as a subcontractor;
|
·
|
potential large fluctuations in revenue in each of our quarters in the near future;
|
·
|
ability to fund expenses to remediate sites from funds generated internally;
|
·
|
collectability of our receivables;
|
·
|
potential effect on our operations with the adoption of programs by federal or state government mandating a substantial reduction in greenhouse gas emissions;
|
·
|
ability to fund budgeted capital expenditures during 2013 through our operations and lease financing;
|
·
|
our cash flows from operations and our available liquidity from our amended and restated line of credit are sufficient to service the Company’s current obligations;
|
·
|
continue to take steps to improve our operations and liquidity and to invest working capital into our facilities to fund capital additions to our segments;
|
·
|
ability to obtain similar insurance in future years, or that the cost of such insurance will not increase materially;
|
·
|
we could be subject to fines, penalties or other liabilities or could be adversely affected by existing or subsequently enacted laws or regulations;
|
·
|
economic conditions and environmental clean-up budgets improve;
|
·
|
plan to fund any repurchases of our common stock through our internal cash flow and/or borrowing under our line of credit;
|
·
|
being potentially responsible party at a remedial action site, which could have a material adverse effect; and
|
·
|
we could be deemed responsible for part for the cleanup of certain properties and be subject to fines and civil penalties in connection with violations of regulatory requirements.
|
·
|
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;
|
·
|
public not accepting our new technology;
|
·
|
the ability to develop new and existing technologies in the conduct of operations;
|
·
|
inability to maintain and obtain closure and operating insurance requirements;
|
·
|
inability 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;
|
·
|
delays at our third party disposal site can extend collection of our receivables greater than twelve months;
|
·
|
refusal of third party disposal sites to accept our waste;
|
·
|
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;
|
·
|
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;
|
·
|
federal government’s inability or failure to provide necessary funding to remediate contaminated federal sites;
|
·
|
disposal expense accrual could prove to be inadequate in the event the waste requires re-treatment; and
|
·
|
Factors set forth in “Special Note Regarding Forward-Looking Statements” contained in our 2012 Form 10-K.
|
Three Months Ended
|
||||||||||||||||
March 31,
|
||||||||||||||||
Consolidated (amounts in thousands)
|
2013
|
%
|
2012
|
%
|
||||||||||||
Net revenues
|
$ | 19,829 | 100.0 | $ | 37,936 | 100.0 | ||||||||||
Cost of good sold
|
19,292 | 97.3 | 33,567 | 88.5 | ||||||||||||
Gross profit
|
537 | 2.7 | 4,369 | 11.5 | ||||||||||||
Selling, general and administrative
|
4,186 | 21.1 | 5,038 | 13.3 | ||||||||||||
Research and development
|
499 | 2.5 | 353 | 0.9 | ||||||||||||
Loss on disposal of property and equipment
|
2 | ¾ | ¾ | ¾ | ||||||||||||
Loss from operations
|
$ | (4,150 | ) | (20.9 | ) | $ | (1,022 | ) | (2.7 | ) | ||||||
Interest income
|
9 | ¾ | 15 | ¾ | ||||||||||||
Interest expense
|
(145 | ) | (.7 | ) | (221 | ) | (.5 | ) | ||||||||
Interest expense-financing fees
|
(23 | ) | (.1 | ) | (34 | ) | (.1 | ) | ||||||||
Other
|
(8 | ) | ¾ | ¾ | ¾ | |||||||||||
Loss from continuing operations before taxes
|
(4,317 | ) | (21.7 | ) | (1,262 | ) | (3.3 | ) | ||||||||
Income tax benefit
|
(1,429 | ) | (7.1 | ) | (455 | ) | (1.2 | ) | ||||||||
Loss from continuing operations
|
$ | (2,888 | ) | (14.6 | ) | $ | (807 | ) | (2.1 | ) |
(In thousands)
|
2013
|
%
Revenue
|
2012
|
%
Revenue
|
Change
|
%
Change
|
||||||||||||||||||
Treatment
|
||||||||||||||||||||||||
Government waste
|
$ | 4,229 | 21.3 | $ | 9,710 | 25.6 | $ | (5,481 | ) | (56.4 | ) | |||||||||||||
Hazardous/non-hazardous
|
687 | 3.5 | 855 | 2.3 | (168 | ) | (19.6 | ) | ||||||||||||||||
Other nuclear waste
|
2,425 | 12.2 | 2,277 | 6.0 | 148 | 6.5 | ||||||||||||||||||
Total
|
7,341 | 37.0 | 12,842 | 33.9 | (5,501 | ) | (42.8 | ) | ||||||||||||||||
Services
|
||||||||||||||||||||||||
Nuclear services
|
10,798 | 54.5 | 18,663 | 49.1 | (7,865 | ) | (42.1 | ) | ||||||||||||||||
Technical services
|
1,690 | 8.5 | 6,431 | 17.0 | (4,741 | ) | (73.7 | ) | ||||||||||||||||
Total
|
12,488 | 63.0 | 25,094 | 66.1 | (12,606 | ) | (50.2 | ) | ||||||||||||||||
Total
|
$ | 19,829 | 100.0 | $ | 37,936 | 100.0 | $ | (18,107 | ) | (47.7 | ) |
(In thousands)
|
2013
|
%
Revenue
|
2012
|
%
Revenue
|
Change
|
|||||||||||||||
Treatment
|
$ | 7,486 | 102.0 | $ | 10,121 | 78.8 | $ | (2,635 | ) | |||||||||||
Services
|
11,806 | 94.5 | 23,446 | 93.4 | (11,640 | ) | ||||||||||||||
Total
|
$ | 19,292 | 97.3 | $ | 33,567 | 88.5 | $ | (14,275 | ) |
(In thousands)
|
2013
|
%
Revenue
|
2012
|
%
Revenue
|
Change
|
|||||||||||||||
Treatment
|
$ | (145 | ) | (2.0 | ) | $ | 2,721 | 21.2 | $ | (2,866 | ) | |||||||||
Services
|
682 | 5.5 | 1,648 | 6.6 | (966 | ) | ||||||||||||||
Total
|
$ | 537 | 2.7 | $ | 4,369 | 11.5 | $ | (3,832 | ) |
(In thousands)
|
2013
|
%
Revenue
|
2012
|
%
Revenue
|
Change
|
|||||||||||||||
Administrative
|
$ | 1,589 | ¾ | $ | 1,740 | ¾ | $ | (151 | ) | |||||||||||
Treatment
|
1,187 | 16.2 | 1,264 | 9.8 | (77 | ) | ||||||||||||||
Services
|
1,410 | 11.3 | 2,034 | 8.1 | (624 | ) | ||||||||||||||
Total
|
$ | 4,186 | 21.1 | $ | 5,038 | 13.3 | $ | (852 | ) |
(In thousands)
|
2013
|
|||
Cash used in operating activities of continuing operations
|
$ | (2,113 | ) | |
Cash used in operating activities of discontinued operations
|
(139 | ) | ||
Cash used in investing activities of continuing operations
|
(125 | ) | ||
Cash provided by financing activities of continuing operations
|
269 | |||
Principal repayment of long-term debt for discontinued operations
|
(9 | ) | ||
Decrease in cash
|
$ | (2,117 | ) |
Quarterly
|
1st Quarter
|
|||||||
(Dollars in thousands)
|
Requirement
|
Actual
|
||||||
Senior Credit Facility
|
||||||||
Fixed charge coverage ratio
|
1:25:1
|
0:63:1
|
||||||
Minimum tangible adjusted net worth
|
$ | 30,000 | $ | 55,349 |
Payments due by period
|
||||||||||||||||||||
Contractual Obligations
|
Total
|
2013
|
2014-
2015
|
2016–
2017
|
After
2017
|
|||||||||||||||
Long-term debt
|
$ | 14,527 | $ | 2,123 | $ | 4,749 | $ | 7,655 | $ | ¾ | ||||||||||
Interest on fixed rate long-term debt
(1)
|
17 | 12 | 5 | ¾ | — | |||||||||||||||
Interest on variable rate debt
(2)
|
1,408 | 413 | 779 | 216 | ¾ | |||||||||||||||
Operating leases
|
3,484 | 656 | 1,538 | 1,116 | 174 | |||||||||||||||
Pension withdrawal liability
(3)
|
235 | 185 | 50 | ¾ | ¾ | |||||||||||||||
Environmental contingencies
(4)
|
1,573 | 376 | 815 | 153 | 229 | |||||||||||||||
Total contractual obligations
|
$ | 21,244 | $ | 3,765 | $ | 7,936 | $ | 9,140 | $ | 403 |
Current
Accrual
|
Long-term
Accrual
|
Total
|
||||||||||
PFD
|
$ | 13 | $ | 56 | $ | 69 | ||||||
PFM
|
21 | 30 | 51 | |||||||||
PFSG
|
458 | 916 | 1,374 | |||||||||
PFMI
|
1 | 78 | 79 | |||||||||
Total Liability
|
$ | 493 | $ | 1,080 | $ | 1,573 |
Item
3
.
|
Quantitative and Qualitative Disclosures about Market Risks
|
Item
4.
|
Controls and Procedures
|
(a)
|
Evaluation of disclosure controls, and procedures.
|
(b)
|
Changes in internal control over financial reporting.
|
Item
1.
|
Legal Proceedings
|
Item
1A.
|
Risk Factors
|
Item
6.
|
Exhibits
|
|
(a)
|
Exhibits
|
|
Second Amendment to Amended and Restated Revolving Credit, Term Loan and Security Agreement and Waiver, dated May 9, 2013, between the Company and PNC Bank, National Association.
|
|
10.1
|
Settlement and Release Agreement dated as of February 12, 2013, by and between Perma-Fix Environmental Services, Inc. and Safety & Ecology Holdings Corporation, on the one hand, and Timios National Corporation, on the other hand, as incorporated by reference from Exhibit 99.1 to the Company’s 8-K filed on February 15, 2013.
|
|
10.2
|
Settlement and Release Agreement and Amendment to Employment Agreement dated as of February 14, 2013, by and between Perma-Fix Environmental Services, Inc., Safety & Ecology Holdings Corporation and Safety and Ecology Corporation, on the one hand, and Christopher P. Leichtweis and Myra Leichtweis, on the other hand, as incorporated by reference from Exhibit 99.2 to the Company’s 8-K filed on February 15, 2013.
|
|
Certification by Dr. Louis F. Centofanti, Chief Executive Officer of the Company pursuant to Rule 13a-14(a) or 15d-14(a).
|
|
Certification by Ben Naccarato, Chief Financial Officer of the Company pursuant to Rule 13a-14(a) or 15d-14(a).
|
|
Certification by Dr. Louis F. Centofanti, Chief Executive Officer of the Company furnished pursuant to 18 U.S.C. Section 1350.
|
|
Certification by Ben Naccarato, Chief Financial Officer of the Company furnished pursuant to 18 U.S.C. Section 1350.
|
|
101.INS
|
XBRL Instance Document*
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document*
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document*
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document*
|
|
101.LAB
|
XBRL Taxonomy Extension Labels Linkbase Document*
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document*
|
PERMA-FIX ENVIRONMENTAL SERVICES
|
||
Date: May 10, 2013
|
By:
|
/s/ Dr. Louis F. Centofanti
|
Dr. Louis F. Centofanti
|
||
Chairman of the Board
|
||
Chief Executive Officer
|
||
Date: May 10, 2013
|
By:
|
/s/ Ben Naccarato
|
Ben Naccarato
|
||
Chief Financial Officer and
|
||
Chief Accounting Officer
|
BORROWER
:
|
PERMA-FIX ENVIRONMENTAL
SERVICES, INC.
|
|
By:
|
/s/Ben Naccarato
|
|
Name:
|
Ben Naccarato
|
|
Title:
|
CFO
|
AGENT AND LENDER
:
|
PNC BANK, NATIONAL ASSOCIATION,
in its capacity as Agent and as Lender
|
|
By:
|
/s/Alex M. Council IV
|
|
Name:
|
Alex M. Council IV
|
|
Title:
|
Vice President
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Perma-Fix Environmental Services, Inc.;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ Louis F. Centofanti
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Perma-Fix Environmental Services, Inc.;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ Ben Naccarato
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/s/ Louis F. Centofanti
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Dr. Louis F. Centofanti
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President and
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Chief Executive Officer
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/s/ Ben Naccarato
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Ben Naccarato
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Vice President and Chief Financial Officer
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