ML20076L669
| ML20076L669 | |
| Person / Time | |
|---|---|
| Site: | South Texas  |
| Issue date: | 09/13/1983 |
| From: | Wray J QUADREX CORP. |
| To: | |
| References | |
| ISSUANCES-OL, NUDOCS 8309190027 | |
| Download: ML20076L669 (262) | |
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- P.n.u coi..m. e..<we ,~c, 1MjQ' E0 UNITED STATES OF AMERICA NUCLEAR REGULATORY C0fitISSION *:3 -- ; ,,
. ., q BEFORE THE ATOMIC SAFETY AtlD LICENSIflG BOARD In the flatter of )
) Docket Nos. 50-498-OL HOUSTON LIGHTING AND POWER ) 50-499-OL COMPANY, ET_ _AL
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(South Texas Project, Units 1 ) and 2) ) AFFIDAVIT OF J. LARRY WRAY ON BEHALF 0F QUADREX CORPORATION IN RESPONSE TO STATE OF TEXAS' NOTICE FOR DEPOSITION OF QUADREX CORPORATION ON WRITTEN INTERR0GATORIES. I syn 8Fa88%h 3 303 a
,v- e Brochures or other material used by the Quadrex Corporation as of
#1 January l', 1981 to describe Quadrex's work, capabilities, etc. to potential cilents, as follows: .(Copies attached)
(1) Preliminary Prospectus Dated August'28,1980 (2) Notice of Annual Meeting of Shareholders, June 10, 1980 (3) First Quarter Report, Quadrex Corp., for period ended 4/30/80 (4) Second 8/31/80 (5) Third " " " " " 10/31/80 (6) Fourth 1 / 31 / 81 (7)- Quadrex Corporation 1980 Annual Report (8) Securities & Exchange Commission Form 10-K, FY ended 1/31/80
.(9) Quadrex Corporation Capabilities Brochure (10) Nuclear Services Corporation (A Division of Quadrex Corp.)
Brochure (11) FOCUS - An Update from Quadrex Corporation /Vol. 4, No. 3 1980 (12) FOCUS - An Update from Quadrex Corporation / Spring 1980 (13) FOCUS - An Update from Quadrex Corporation / Winter 1930 (14) Quadrex Corporation Offers a Full Range of Decontamination and Decommissioning Services (15) Health Physics Systems, Inc. (A Subsidiary of Quadrex Corp.) Mobile Decontamination Unit (16) Quadrex Corporation - NUPIPE(Piping Stress Analysis Computer Program (17) Quadrex Corporation - PRTHRUST(Fluid Blowdown-Analysis Com-puter Program (18) Quadrex Corporation - PIPERUP(Pipe Fiupture Analysis Computer Program (19) WR 78 Pipe-Whip Restraints (Technical Catalogue) (20) NUPIPE NEWS - Vol 2, No. 1, Spring, 1980 (21) 'RTHRUST P AND PIPERUP Computer Programs for Postulated Pipe Rupture (22) Nuclear. Services International Corporation
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;#2 -"Technical adequacy or inadequacy" is the judgement that the
-B&R; engineering response to date to known unique nuclear industry issues and problem areas was or was not satisfactory.
As HL&P's time schedule was -short, the scope of the procedure was to a'pply only to certain technical disciplines (Volume 1, Section.1.0,p.;1-1). A sampling program was.to be used as- the procedure, rather than an exhaustive, detailed, design review. The sampling procedure was to result in insights regarding the-adequacy of the technical work' performed to date and to indicate potentia' problem areas.
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#_3 The report's purpose was to assist HL&P in a technical review of portions of the engineering design work performed by Brown and Root, Inc. for the South Texas Project. B&R engineering responses to known unique nuclear industry-issues and problem areas were sought and indication .of design areas for- further inquiry by HL&P .were to be brought to HL&P's attention.' Because of the limitations of scope and time, and-because this review used sampling but not design review procedures, complete information to Quadrex could not be assured. As a result, Quadrex could not be conclusive of an indication of reportability, solely on the basis of the report's information. Consequently, the report's information was provided to HL&P to be used, together with its more extensive knowledge of the overall project, to identi fy reportable items.
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-#4 Quadrex e'mployees who participated-in various meetings are listed Lin:-: Volume 1, -Section 2, pages 2-3, 2-6, 209,;and .2-10. The personnel:are associated with each' evaluation. area in which they
, parti ci pated ._ In.some-instances, they participated in more than one area, or.more than one person. participated inLsome. areas. In general ~, each was responsible for~ the portion'of the area in which he participated.- These separate evaluation. areas were coordinated by the review leader.
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s s 3 The review lecder was Mr. Loren Stanley. t,t the time of the review, Mr. Stanley reported to J. L. Wray. 1
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#6 0@adrex did not confine itself to drawings which had not yet been
-+ ! released forfuse by construction'. Answers to Quadrex questions
< were* supplied by B&R. There were no limitations specified by
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Quadret as' to the sources ,) of information > that B&R could use for their answers. . . 1 i
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E Quadrex Corporation was incorporated on December 16,1969, under the name Nuclear Services Corporation. The name was changed to Quadrex Corporation on September 12, 1978. Since then Nuclear Services Corporation has operated as a division of Quadrex Corporation.
f8_ Quadrex has not been engaged by anyone to perform additional review work, to re-review any additional info-mation in the evaluation areas, or to evaluate new information in other reviews made subsequently. Consequently, as of now, we know of no changes to be made in any finding in the Quadrex report. A review of the February 12 draft of the March,1982, Bechtel Tark Force report was made for accuracy and factual matters. Comments transmitted to Bechtel may be found in Question 10. s
t H Quadrex has done no further review work. Quadrex does not believe any of the generic findings, which were suggestions for HL&P reviews, are unsupported by the indications found at that time in the various technical disciplines.
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#10.'a Yes.
#10.b No. A . copy of the repcet-was received by Quadrex. One of our employees scanned it at that time.
t , #10.c LTR: Mr. Ramon L. Ashi-ty, Bechtel Power Corporation,
-dated March 2,1982, from Quadrex Corporation, responding to
[ the request 'for comment:. (attached). J
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#10.d' Quadrex comments regarding accuracy and factual matters contained
. in the draft Bechtel Task Force Report are contained in the letter to Mr. Ramon L. Ashley, dated March 2.1982 (attached). 1 t 4 s i v--, >n , e,.,-w .r,--+ p-w--,-, ++ .e-a- y e v ,,,e-, -g., , + - .n,,c e- , . - - , . a r -, -er -ne, e - - , .n- e e
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" 0' March 2, 1982 LS-82-032
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fir. Ramon L. Ashley Bechtel Power Corporation . 12400 East Imperial Highway
. Nordalk, California 90650
Dear Mr. Ashley:
In response to your letter of February 12, 1982, Quadrex has reviewed the draft Bechtel Task Force Report, "An Assessment of the Findings in the Quadrex Corporation Report dated May 1981" and has prepared comments regarding accuracy and factual matters as requested. .In addition, Quadrex has developed other comments for purposes of clarification where deemed important. The Quadrex report presented the results of an engineering design review program that examined actual implementation of design criteria and licensing commitments into a variety of STP design output documents as of March 1981. The Bechtel Task Force Report did not assess STP documentation; rather oral information from Quadrex, Brown and Root,'and HL&P was used to develop the. Bechtel. assessment. In.many instances, these Bechtel -assessments appear to reflect modified designs subsequently accomplished by Brown and Root rather than the acteal state of design reviewed.by Quadrex in March 1981. . Quadrex comments regarding accuracy and factual matters are as follows: , , COMMENT 1: (a) page 1, Introduction, line 8 ' (b) page.-1-3, Section 1.0, line 4 (c) page 1-3, Section 1.0, footnote (3) lines 6 through 10
.Quadrex prepared all of the design review questions.
' COMMENT'2: page 2-2, Section 2.1, aspect number 2 Quadrex technical reviewers prepared their individual findings # rem late March through'mid-April. The Quadrex Project Manager made an initial assignment of each individual finding into the~ ranking categories designated by HL&P, and reviewed these assignments with-each Quadrex technical reviewer on two separate occasions in late April.
COMMENT 3: (a) page B-1, line item 2 (b) page B-6, line item 10 (c) page B-13, iine item 22 Quadrex did not see any evidence during the design review that appropriate factors were applied by B&R to account for the confidence level in the preliminary loading or environmental data.
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b b cuuonex March 2, 1982 Mr. R. Ashley COMMENT 4: page B-12, line item 20 Quadrex assessment for Question C-12 states that theQuadrex However, plan forhas B&Rnotre-analysis of the duct ring was acceptable. reviewed the actual re-analysis itself. COMMENT 5: page B-21, line item 48 The Bechtel evaluation statement contradicts a subsequent evaluation for line item,212 as to whether the B&R Design Assurance Group would review FMEA's prepared by the discipline groups or would prepare FMEA's itself. Assignment of this responsibility within B&R appears to be still uncertain. Quadrex was concerned during the design review with the lack of effective technical response from four B&R technical disciplines Thisregarding FMEA's lack of response, and postulated single failures to be considered. coupled with the obvious instrument line blockage postulated failure shown in the assessments of Questions E-15 and R-6, remains a major concern. COMMENT 6: page B-30, line item 53 Bechtel states that the B&R methodology is reasonable (i.e., the specifying of general industrial standards and allowing vendors to inter-pret,etc.). This seems to be contradictory to the Task, Force opinion stated in its assessment of Section 4.3.2.1(j), line item 59. COMMENT 7_: page B-32, line item 57 . Quadrex stated that no basis or procedures were provided In the B&Rtoresp identify 6nsesupport fo systems needed to assure safety system performance. Question is made. E-3, air-conditioning is used to illustrate how thi normal conditions for HVAC were not considered in the HVAC calculations, and safety classifications of HVAC systems were not traceable to " user" systems. Consequently, Quadrex contends that improved bases or crocedures are need to assure that the needed support systems will be completely identified in Furthermore, Bechtel's evaluation of line item 82 supports the B&R SDD's. this position. COMMENT 8: page B-32, line item 58 Quadrex believes that the project-wide documented b document. An HVAC example of FSAR to RCFC specification Indeviations is addition, the illustrated in the Quadrex assessment of Question H-11. environmental conditions for component oualification were deficient as noted in Quadrex assessments for Questions N-1, N-3, N-4, N-5, N-8, N-10, N-12 Furthermore, approximately 50% of the SDD's did N-14, N-15, N-17, and N-19.not contain syste'm operating temperatures a Consecuently, Quadrex has no evidence to support the of Question P-1. It should be noted that the Bechtel Bechtel evaluation of this line item. evaluation for line item 81 supports this Quadrex viewpoint.
D U A Q 5a C X Mr. R. Ashley March 2, 1982 COMMENT 9: (a) page B-35, line item 62 (b)pageB-42,lineitem76 (c) page B-50, line item 95 Quadrex questions whether the implementation of testing provisions should remain a low priority item for design. In the Quadrex assessment to Question H-7, testing requirements or criteria are not provided in the SDD's. Quadrex cannot support B&R's statement for line item 95. COMMENT 10: (a) page B-97, line item 187 (b) page B-99, line item 188 (c) page B-108, line item 204 Quadrex has major objections to the Bechtel evaluation for these items. As of March 16, 1981, the quantity of analysis performed was low compared to the state of plant construction. The reviewed analyses were in error and were not for currently postulated breaks. Secondly, Quadrex did not refuse to review current valid analysis. After finding errors in several previous obsolete analyses, nothing could be gained by further review of other obsolete analyses. Further valid complete analyses outside of contain-ment were not available for review. Finally, on March 16, 1981, S&R Nuclear Analysis Group did not identify high energy lines in the MAS or the need for their analysis despite considerable Quadrex verbal cuestioning. There were a number of other areas such as door ppsitions, makeup water, MSIV logic,
. and control of analysis output in which the B&R Nuclear Analysis Group was not knowledgeable on March 16, 1981.
A major rationale in the Quadrex ass'essment was the state of analysis . relative.to the degree of plant construction and the lack of a schedule , for future analyses. COMMENT 11: page B-106, line item 200 In addition to the question of initial conditions, B&R did not address simultaneous shutdown of both units in the reviewed analysis. At this time B&R verbally dismissed this from being a safety issue. COMMENT 12: page B-115, line item 215 Quadrex asked four separate B&R disciplines for their list of postulated single failures to be considered in FMEA evaluations. No such list was provided during or subsequent to the design review period. Quadrex main-tains that no such evidence was available in March 1981 to support the present Bechtel evaluation. In addition, the following comments are provided for clarification: L
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Mr. R. Ashley March 2, 1982 COMMENT 13: page 1-6, Section 1.0, footnote (4) lines 2 and 3 . No difference in the Most Serious Finding definition was intendec: by Quadrex. COMMENT 14: page 2-6. Section 2.2, last item prior to Section 2.2.3 This~Bechtel statement may be misleading to the reader of the report. Brown and Root did not volunteer to present their overall design philosophy to Quadrex, nor did Quadrex request such a presentation beyond the specific discipline requests contained in Questions C-18, C-23, C-45, E-1, E-20., G-1, H-16. H-17, M-1(B&R), M-2(B&R), M-4(B&R), P-3, R-1, and R-3. However, within the first ten days of the March 1981 design review program, the overall B&R design philosophy became quite evident .from their answers to specific questions. COMMENT 15: page 3-2, Section 3.3, last paragraph The scope and extent of the Quadrex prepared question set went well beyond the scope of potential problem areas identified by HL&P to Quadrex prior to January 19, 1981. A significant number of the Quadrex prepared questions were directed toward frequently-encountered . problem areas observed in earlier PWR and BWR plants to see if Brown and Root had taken advantage of
- these learning experiences. By mutual agreement, previously identified STP problem areas that were being formally addressed by B&R viere, for the most part, excluded from the Quadrex design review effort.
COMMENT 16: page 3-3, Section 3.4, first eragraph It is not clear whether Bechtel's statement concerns the technical content of the finding, its assigned ranking category, or both. Quadrex believes that it is important that differences between industry and NRC criteria be recognized and acted upon by the responsible designers (Ques-tion C-5). It is also important that FSAR commitments be reflected in the
' design output (Question C-20). Finally, it is important that appropriate methodology be used in the analysis (Question C-43). The Quadrex finding endeavored to convey these specific aspects. ~
COMMENT 17: page 3-3,'Section 3.5 The particular technical disciplines to be reviewed were chosen by HL&P as illustrated on page 1-1 of. the Quadrex report. Participation of the B&R Design Assurance Group and the B&R Licensing Group in the design review program was not explicitly excluded by either Quadrex or HL&P. During the conduct of the design _ review program, Quadrex examined numerous design outputs for implementation of design criteria and FSAR co.mitments that would typically be the responsibility of these two B&R engineering groups.
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t' . h u/ NL5ADACX . Mr. R. Ashley March 2, 1982 COMMENT 18: page 3-4, Section 3.6 Throughout the March 1981 design review meetings in Houston,'Quadrex was never informed that other key B&R individuals were unable to participate sufficiently in the meetings. Actual B&R particioants in these meetings are shown.on pages 2-2, 2-5, 2-7, 2-8, and 2-10 of the Quadrex report. All of the individuals outlined in the B&R organization chart shown on page 2-11
~of the Quadrex report attended the meetings affecting their technical disciplines. ,
COMMENT 19: page 3-4, Section 3.8 In a number of instances Quadrex requested to see definitive plans and schedules for the correction of identified problem areas, but was never given any B&R-plans or schedules to review. One pertinent example of a Quadrex request is'provided in the Quadrex assessment of Ouestion N-1. COMMENT' 20: pages A-1 through A-27 Generic findings presented in Section 3 of.the Quadrex report are derived from the individual-technical discipline assessments provided in Section 4 1 and Volumes II and III of the Quadrex report; In the Introduction of the-Bechtel report, their assigned task was "to review the Quadrex report and prepare an assessment of the Quadrex findings.". - - However, in the.Bechtel evaluation of the Quadrex generic findings
- contained in Exhibit A, very little. information is provided regarding -
Bechtel's evaluation of Brown and Root relative to the generic findings Lat the-time of the March 1981 design review. The majority of the Bechtel c p ' evaluations state how Bechtel .will address these generic findings in the future. Quadrex-does not believe'that this approach'is responsive to the assigned task.
. COMMENT 21: (a) page B-3, line item 6 (b) page B-34, line item 61 (c)'page B-93, line item 181 Quadrex based ~its finding on how-effectively the B&R procedure for addressing new NRC requirements was being imolement'ed into design output documents;- however, Bechtel's evaluation is based solely on the fact that such a procedure-exists at B&R. . Evidence provided by B&R.to Quadrex-indicated that-the actual implementation of the B&R procedure needed considerable improvement.
-COMMENT 22: (a) page-B-4, line item 7 (b).page B-56, line item 112-Quadrex observed that B&R applied. the unverified 130 Kips input load in a different manner 1than EDS had specified, and could not obtain a suitable justification for the B&R approach.
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- QUAEACX Mr. R. Ashley March 2, 1982 COMMENT 23: page B-22, line item 40 Quadrex assessment of Question C/M-8 indicated that some of the five permitted options are clearly preferable to others, and that no guidance was given to the user on how this selection should be made in specific cases.
COMMENT 24: page B-29, iine item 50 Bechtel's evaluation statement that B&R's approach is consistent with Bechtel's experience for identifying needed top-level documents ignores the fact that several rather important TRD's, such as safety-related classification, ISI, and environmental qualification, were stil.1 not issued for STP in March 1981. Quadrex found no evidence to justify why these documents had not been identified and prepared at the beginning of the design effort in the mid-1970's. COMMENT 25: page B-31, line item 54 The Quadrex finding did not suggest a single comprehensive list but rather a top level criteria document that would provide direction and guidance for tne many different lists and documents to' be generated during the design phase. . COMMENT 26: page B-34, line item 60 B&R stated to both Bechtel and Quadrex that meeting the single failure criterion was sufficient to assure safety system performance. Quadrex contends tha't this simply is not sufficient, and would expect to see - either additional requirements regarding quality (as Bechtel suggests) or an acceptance criteria for the vendor reliability calculations. Quadrex did not mean to suggest that the specifications should include reliability figures. The specification did require that reliability calcu-lations be provided to B&R, and Quadrex was looking for the acceptance criteria by which the calculations would be judged. COMMENT 27: page B-47, line item 89 Quadrex was informed by B&R that air flow evaluations assuming open doors, etc. were not performed at the time of the design review. Quadrex did not obtain information from B&R that would assure that the resultant air flow direction would continue to be from clean to dirty areas. COMMENT 28: (a) page B-59, line item 116 (b) page B-73, line item 141 At the time of the design review, a draft TRD for In-Service Inspection was reviewed by Quadrex. The results of this review are presented in Section 4.9 of the Quadrex report. Many operational problems were identified in this section of the report.
( a,<h'AM N . l QUADAEX Mr. R.-Ashley - 7- March 2, 1982 COMMENT-29: page B-73, line item 142 Quadrex was informed that the Teledyne analyses were for the IVC, and that
- other pipe rupture analyses had not yet been performed by B&R.
COMMENT:30: page B-86, line item 167 Bechtel's evaluation completely overlooks the specific quality problems delireated by Quadrex in the B&R review of a number of vendor reports and analyset,. Quadrex does not agree that B&R's review methods at the time of the desian review were reasonable based on the Quadrex assessments
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of Questions M-36, M al, M-49, M-50, and M-51. COMMENT 31: page B-86, line item 168 Quadrex does not agree that preliminary non-safety-related calculations using unverified computer codes are satisfactory for safety-related applications as long as the final calculations are designated to be safety-related and use verified computer codes. Bechtel's evaluation appears to conflict with our understanding of 10 CFR 50 Appendix B. , COMMENT 32: page B-88, line item 171 , Quadrex, rather than B&R, initially identified this error. Quadrex.also followed-up with B&R after its discovery to assure that correctivo action-would be taken. COMMENT.33: (a) page B-96, line item 185 - * (b) page B-109, line item 205 On March 16, 1981, there was no evidence of sufficient analysis to support SDD 4E010EQ004-A. COMMENT 34: page B-104, line item 196 A double ended break analysis (particularly one using steam with enthalpy of 1306 BTU /LB and RELAP3) in a large building has no relation to results using a crack break which is the FSAR break commitment. COMMENT 35: page B-108, line item 203 The'Bechtel evaluation regarding cost effectiveness is not understood. Seismic support will generally reduce access, impair maintainability, and impose constraints on implementation of future design requirements. COMMENT 36: page B-117, line item 218 "Near Break" guidelines for valves were not presented on March 16, 1981.
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,-0 JJ GUAQACX . Mr. R. Ashley March 2, 1982 COMMENT 37: page B-128, line item 234 Quadrex concurs that the 10 half cone angle approach yields conservative loads; however, it is not conservative from the standocint of defining potential targets that may be impacted from sub-cooled flashing water jet effects. COMMENT 38: page S-147, line item 262 A reviewed B&R document had uses SSE SAM loads, but E&R stated to Quadrex. tnat these loads were not to be considered. COMMENT 39: page B-149, line item 267 Cuadrex believes that B&R's practice of placing ALARA reviewer resumes in a file may not be adequate, and considers it prudent to define the basic qualification requirements for an ALAPA reviewer in view of the importance placed 'on ALARA in plant design. COMMENT 40: (a) page B-152. line item 271 (b) page B-165, line item 298 Quadrex was concerned with B&R Statements during the review meetings that certain work performed by other organizations, including NUS, was considered to be " foreign data" and was presumed .to b6 correct upon receipt. COMMENT 41: page B-153, line item 274 , As pointed out at the time of the Quadrex review, one of the major concerns " was correlation of radiation zones with shielding design for accident conditions. B&R had not addressed accident conditions.
~We appreciate the opportunity to assist Bechtel in its preparation of this report, and will be pleased to respond to any questions you may have regarding our comments.
Sincerely, fiA% Loren Stanley Group Manager Consulting Engineering LS/bjk
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.#11.a .Yes fil.b&c' As stated in the Quadrex report, the purpose.of the Quadrex review was to carefully devise a sampling program to determine e
the B&R Engineering response to known unique nuclear industry L and problem areas." Sampling questions were given to B&R. B&R schected the. Individuals to respond to the questions. In turn these individuals used their technical knowledge and information to supply answers. Quadrex placed nc restrictions with regara to whom B&R st;1ected to respond to the questions. Since the questions were mostly specific discipline oriented, it was-logical that those individuals selected most likely would be from the appropriate discipline within B&R. In the Quadrex-report, it indicates that J. Grimes' attended the pre-meeting on Radiation Control on February 24, a.m. (Vol. 1, Section 2, page 2-2). J. W. Grimes is listed in the Systems Design Assurance Group (Vol. 1, Section 2, p. 2-11). Other B&R participants are listed in Volume 1, Section 2. It I is. possible that some of these individuals may have been members of the' Systems Design Assurance Group, but information is not known-to Quadrex.
#11.d&e The only additional information of which Quadrex is aware of is I
- the presentation to Bechtel' Task Force by B&R, contained in the
. draft Bechtel Task Force Report, Section 2.2.3, page 1-6. On page 2-8 of that same Section, -it is stated: "B&R indicated
- that at the time of the Quadrex design reviews, the effect of the Phase 1 program may not have been evident since most of the~ results of discipline resolution (of the results of the design assurance reviews) had:not been factored into revisions of the appropriate design documents." We still have no basis
;for any Judgement or position.
- #12.a&b As stated in the Quadrex report, the purpose of the Quadrex review was "to carefully devise a sampling program to determine the B&R engineering response to known unique r.uclear industry : j and problem areas." Sampling questions were given to.B&R. B&R selected the individuals to respond to the questions. In turn, these individuals used their technical knowledge and information to supply answers. Quadrex placed no restrictior.s with regard to whom B&R selected to respond to the questions. Since the questions were mostly specific discipline eriented, it was logical that those individuals selected most likely would bc
'from tt:e appropriate discipline within B&R. B&R particicants are listed in Volume 1, Section 2. It is possible that some of these individuals may have been members of the physical Design Assurance Group, but that information is not known to Quadrex.
#12.c The only additional information of which Quadrex is aware is the presentation to Bechtel Task Force by B&R, contained in the draft Bechtel Task Force Report, Section 2.2.3, page 2-8. On that page it is stated; "
Lastly, it was stated that there also existed a Physical' Design Assurance Group, which was formed in July,1979, and had completed its first report just prior to the start.of the Quadrex design review. Its function was to perform a total physical plant evaluation of the design and any design changes required to satisfy new regulatory requirements. According to B&R, the efforts of this group's activities had not yet been factored into' the discipline design process."
#12.d We'still have no basis for any judgement or position.
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#13.a The first discussion of categorization of findings-and problem areas occurred on April 13, 1981, at a meeting of HL&P and Quadrex. On April 15, 1981, J. H. Goldberg proposec a categorization syste.n of four divisions in an HL&P memorandum to J. R. Sumpter. -These four categories were subsequent'y enlarged to five (reference the Qua'drex repcrt, Volume 1, Sectior. 4, pages 4-1 and 2).
'#15.b Correspondence regarding the development of the rank 4aos is ir.
the docunent attached: Memorandum April 15, 1981, J. H. Goldberg to J. R. Sumpter, Subject "Quadrex Review of Brown and Root Engineering, 4 Problem Categorization," with notes of L. Stanley attsched.
#13.c 1) The meaning of-this is generally that there exists a body of Federal. and State engineering requirements together with STP licensing commitments, all of which must be met, demonstrated, or shown to exist by the licensing applicant. Design features-satisfying these requirements would have to be incorporated in order to obtain an operating license.
- 2) The meaning of this is that the design item could be judged to meet the requirement (s), but in a manner that could be
- . judged to possibly require additional licensing review time.
- 3) The meaning of this is that at any one time, the NRC has
" issues" which it reviews SAR submittals against. These issues are not in formal rules and may be generic or specific.
Incomplete address of these issues could result in licensing delay, for example.
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. : . . . .. . i Houston Lighting & Power Company OFFicf. ?!5?.!OR ANDUM To J. R. Sumpter , April 15,1981 from J. H. Goldber M#ct Quadrax Review of Brown & Root Engineering
- Preblem Categortration: .
Confirming our discussions of Aprl! 13, ! would like the Quadrex review to identify the v::!:::a f:ndngs wl:h en appropriate prebl- a categorizatlan. Betow is I:t:d t:o sys'. m thst I crafer thsm to u:e: dl/ . A. Most Sericus - These pr:blems pose a serious threat to plar.t !::::.::t"::y in that wc have not d8's&f*lws W" # satisfL?d f 3C reatdrem:r.tr apaller.ble to yg?" STP. g g ,g,, y,tj B. Serious - .v 0a .urno These problems pose a concern for the plar:t to gent.:ts r:!!cb!s power (excluding th :e contain:d in Cct. A.) . C. Noteworthy - These problems contr!bute to project schedule and/or c::t increstes w!.lle not po:ing a concern far either licensnbility or reliability. c D. Potentla! - These problems may or may not exist. Further Investic tlen is required to definitise. Once confirr. :d, they would f:ll into cne of the above c .tecorlos. y' JHGisra b cc: D. G. Barker e t.
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#14 No. The Quadrex report explained the term " generic" in Volume 1, Section 3.0 Generic Findings, page 3-1.
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!15' First Quotation: Quadrex agrees that the discipline findings are
.the basis of the generic . findings. (Refer to answer to previous Question).
-Second Quotation: ' Quadrex cannot agree or disagree with this statement because the word " deficient" is.ambig'ious. Qttadrex felt
.that if the discipline findings were addressed in completing the
^ engineering design, the design ec.21d ta made to account fer the cencern of the. findings.
1 4 4 5
#16 It was Mr. Stanley's own assumption, as he stated to the NRC.
Quadrex is unaware of any communication Mr. Stanley may have had with HL&P on this subject, as he stated to the NRC. Quadrex has no reason to believe thst the report should be made available to the NRC. Quadrex is not aware of the basis for Mr. Stanley's assumption, as he stated to the NRC.
. .. o
#17 To my knowledge, Quadrex Corporation is unaware of any communications prior to August,1981, between Quadrex representatives and the NRC regarding the Quadrex report to HL&P.
v e . . . STATE OF CALIFORNIA ) COUNTYOFSANTACLARAl BEFORE ftE, the undersigned authority, on this day personally appeared J. Larry Wray, Vice President, CcTputer Systems Division, Quadre: Corporation, who, upon his cath, stated that the foregoing
" Affidavit of J. Larry Wray on Behalf of Quadrex Corporation in Response to State ef Texas' Notice for Deposition of Quadrex Corpora-tion on Written Interrogatories" was prepared under his supervision and direction, and that all answers contained therein are true and correct to the best of his knowledge and belief.
Q. rm !!/Lin
./LARR/ WRA
. SUBSCRIBED AND SWORN TO BEFORE f4E by the said J. LARRY WRAY on this eFL day of September, 1983.
, nmmunmnnnmem,. ,
#, OFFICIAL-StAL 's
% d 'h. NANCY W. GRifflN h!YY "$$Er[$sE!I'$tf[j^ {j
% ~/h k NotarypFublic fof,the State of California u, 2s. us7mmmmt;,
co- to
'emmmuum.
fly Commission Expires: July 28, 1987 1
- y 3 -.,, _e - . - , - e ,3._--_.. , .-m'- -
--,w--re-- --,Ww,-,- --',-e--~.--m+-ear w'm-+, -r--.v'
c +, kAL t , e . .. PROSPECTUS 725,000 Shares Quadrex Corporation ; Common Stock The 11nderwriters are acetuaring the 725.tne shares of Gunnum Star 1 offercJ herehr(the ~ Shares")frum the Sethng Shareholders. See "Prsruipal und Sclhng Shuerholders." T he Con
- puny =d! we rescare any prtu retis frtwn the eule of such Shares.
The Comsusnya Commari Stock is fruded eri the swer the-unanter nw rket on September 17,1950 the classng hideguotutsun for the Omemon Stut1 was $17%. as reported by the Natsunut Assansatsun n% urstie. Dealers Automated Quotations System (NASDAQ syml=>l:"QtfAI)~). See *Prke llunge nf Commun Stua k." TitESE SECtlRITIES IIAVE NOT St'EN APPROVEtl OR DISAPPR(WED BY Tile SECtlRITIES AND EXCIIANGE COMMISSION NOR II AS Tile COMMISs!ON PASSED tlPON TIIE A(X~.URACY OR At>EQtlACY OF Tilts PROSPEt.TUS. ANY REPRESENTATION TO TIIE (XWiltARY IS A CRIMINAL OFTENSE. Peaseede s. yeke e. ti.Jeewew=s Sett*-a Peshle6 thes ammen g Sheeek blees t2l Per Share $ t h 50 $ t to $ 15 en Total pl . $ I1.9ti2.Stto $ 797.5f10 $11.165.tr#, I:t Tb Cienpeny and the %It*s shmbbks bene esemed se 'y Ilm thubwemws esemot testeem laeWWws. Nu terms leebilmere medes ek kranties An e J 3933 See *tseulerwening-12t heure J=tintoas espeases. einmee ed es appe eumetely $23s. nun. =6 h wett 6 gwyehle by the httmoshesektJess I31 The ibeJeeweseees home be== greased e Jo Jey ope = en geethee op se 72. Sees eJJetmaiel shares de en two of ob Mieng Shese-bhke ese the seiene tenne per shee .a tunes ==ee elkememan. et emy 30 sees b e.hidmenet shoes see puse heed.th e.4el gews e ab pue4=6 will be $1 s.1Se.75e. sh e. del undes wassen Jastuumes well be $nr7.2sa, and th esdel pem eeds se che kilong h! 45res well he $12.2ag.5das Le Petee spot and bitmg Sbeelmeblees' e=J *tinJoewemmg
- The shares are hetag of fered by the Ifralerwnters subiert to prsur sole umi when, as and 4 alchve.ed su unel sua epted ley the Iimicrwresers umf sub ros t to uppraerul of s erfum legul mutters by cammsel. et es empt trd shut delivery of the Shores willle enade agamas payment there for on or atamat Septemler 25. a' 9no.ut the offncs of Dresel flurnluun f orabree fruwg=auted.
Drexel Burnham Lambert e. _ e.es. . Septemin v Its.19nn
M' - c AVAll.ARI.E INFOHAIA180N '
- Tlw C.=niu=y is sul t.tt to ele enf.nniati.enal es t==tmg entunen=2d> eJ tia- Nueaste s Eulunge finost.I'(TOs suHht4ny At t eJ l'fil ae=1 su ania.l.mr flererweth files saluets, gunst tahan nts awl edlm-r sul.unutum matie tier Monstus aml Estlum:r (innminense fCsummnense"). Ied.umatism as eJ gustet ular el.etes u"" TI.c f.Jfoes sag inf.wm ethee is yndfahnl 4ae sie rntiraig ley fisc informatiam omf famas kal sinfrments migrerene rin n he-rs is f/m fanspn tns aronn.g alient.wn 4 nl offierrs eJ t!.c (imignun Hwn annum 14tum, ugdams geantal ice thrne, llw
, ' gwim epal I..kless J ut neders eJ tlw (Lieng.any, anel-.any erutree.at e . treed e f weal gu es sees in trans . g ., cal:sms m stle the Co ngeany is thse begrel its g.enny statenweets olhtesla.tnl les sl.aecim kless ed tier Cawnguny mial fitnl witte else (imm.inum Su le erlmuts. Inmy stat.um nts, aml ottws udennutism e au le imgusin! V"Irrs Cairimwabm Iwane.hs a we.lr sange d cosa.innih.g ann! enlukal snvien la da-ami n1un! at slic I*nt !w Itrineme lhame es! tier (inmnhskm. II(m I, Stent
- N.W' llanun 6108* "' I"" ""'"D " "* I Wa lonrt.m D C. Ornt9 amt at al.c G=nmini m's it. uuuut (HIw e 3 at 219 Smile Draelnnn Sten-t, s]"sigse, c si.entenatra staategt nunJenaasar an:l egasatume. T1.r '.( ine.su 'y a she*ts ee.ilaale el.s t It..nu 1224. Cl.irag tilow.e. tand81. 26 l'esinal 11.ua.11.==n lital. New YmL. New YmL 1(du17, aml et,la , ,,,lutet,n,al e.g;nceseng h'nas. e ta9"'wat Soli d art 5 '=3 'dlar8* i"'aI'"I '" 'I** "I
imme, imhnery In nn st fint g=3 =Is a nail amnl.i A .lents an.mnt I..e a sen ustat.entul ItPrd W lsture li a.h rant. Smtr 1710. Ims AngcIn. C.shi. rnu ?nar28. mmt utm-s of unle nutnial i=4thee ud clar Omeguny's f,Wmwg. NY 'IInWww-Clarest[ Me guges 11 th can le olitainn! frmn t!.c Pul he Hefnence Lxtuwe ed tisc Onnmini m. Wa Imagtem. D C. 2t1519 at twcse relml rates TIIE OFITHING
~~ - ~ - '
%rnedws Oficer.1 75.tNel stuers e4 Gum .a St.a L 1..e the menomen.J tlw % thug Slue.l .l.IrvyIX2)
Ommme Samt O stelmating 3.tK1.298 sluns at July 31. PP421 ' IM CONNECTION WITII Tills OITEltlNC. Tile LINDERWillTEILS hlAY OVI:ll-Al.I.OT g,,,g,. ,,g pg,,,,g gg,,g p,;, n g,,, ,g, p,,,,,,,,,,, g,, g Olt EITECT lit 4NSACllONS WillCll STAbilILE Olt AIAINTAIN Tile hlAltEET rillCE (l'rio elumegh S;temt re 17) thgh $17. Imm : StiN OF file CO%I AION STO( K OF TIIE CO%ll'ANY AT A IEVEl. AllOVE lilAT WillCll hilCIIT OlllEHWINE PitEVAll. IN Tile OPEN bl AltEET. SUCll STARil.lZINC. IF CONI %IENEED, hlAY
!!F. DisCON~llNt't:D AT ANY TlilE. ' ' ' '
(la ef.n n e.J. eserpe per shaee el. eta) hs he wl 6m.ted h.t,18 Veme Pa.JeJ lanune, M. Illma ldeJI Is7s 1977 -997s Isis Ishe is7s inese N.i ltevemws 410.111 31tditi $12.91'J Sil.ttu - $21.ltes $4.716 $21.52*i Net Imsm.c 676 141 1.0 87 1.5'in(31 2.223 h l2 INil Net Im.mw two sluec(2) 51 .17 .35 il('l) ' .75 29 5') C.n!. IhviIrmis per st.areil) .tr. as7 in 11 .35 u7 .lu 3 l :ll,tw%e t l' a=Jard e Wueling Calutal $ 7 ende Tntal Aurts 19.115 T.dal Img Trem Ih I. 1 229 Sh.serts. frei IGgmty intraI ( 1) . lN imics 72.5:10 ml.l.ti. ! s8mr of Ommum siniL ml.pne t.. tin l'minneetni men-4thenwnt eiptiem. (2) Af ter giving efhs1 he a tlan for eme semL spha e(Irreive klarsh 17, !? tin (3) Imin.L s nteannh.ury unht of $7tn. tan ($ 28 gre stuer) Inme life enu.same gue=mit Nv N.de .I to G=.winlatal Frume ! Statenu uts. ( 1) S.- Notr E to nom..Infatul St.elenwnt J Imunw. 2 3
~
y r Tile COhll'ANY Voture pa3 nwnts of ihrV ,=h weil la t the shwrothin eJ the thueil e4 Desrat.ws amt nsil 1.c
*k 1 **k*' II" 8)""l'd") * d'""M .nse"f.naeu
" "*"Id""***I' " ' ' ' " ' ""P""# ^ I Qiuihrs fi= pes.ition (fusuu1ly Nmicar L1 vires Cawpwatk..) I ,nvi. irs a wkle ,anEc or c,N "1""'
sal tuve sunts an its 1.'anL leuis agre t sm ut. lu tlic sutsung aeml Inl.unal senese s to IIw ntnicar pmrr emhntsy These wrsnes sng.p.st all i.lus. s <J
- W 'I". ,1."I' "uIi lei,.lun .t itnl by rest u, . .n.,ia. ta.. .,s h,.in agn ,m .t ret. 6.g P.n ni,1- .. w- t1-
'*"d',
t,oc p,.ananmg. ilcugn. unistsin tpies, st.astup, nuhitoume aml sqwratisies sif sam lcar gieswer gilants Tlic U"f 99g go q h 4 4 ed whinnue4 menue.te tiu s se v el . ! : e ilm e 3 er Itat e 8
- I* 88 I " G ""P "I #* ""' "
Statem.nl sJ Imverw. Tlw C.=nguny was imwanr4tril in 19ti% Its rsetiivise e f&,s 4:e Incatril at 1700 l),ll Avenue, C.aniphill, C liloini ?!~.IIO4 aml sts teleptwine unenlwr is (Fri) Nf6 8510 As nwil in fl.is Pemgwatus, p3pg ggg,gggggpq tle b anp.s n> s es Q.usla n erfors to Qn.ulin C ng=wati.wi anel its sul shli.nics. tentess lle emitest ollwewtw s.vpiters 3% bil. ming tMile srts forth fl.c paoulnI ntatI caPtdIi#dtH"8 85 II'" C'""I""I ** '4 I"iY ^II-ISM). PillCE IIANCE OF COAL %10N STOCK II.c C.annunt's Cainnuas Stml is tr.nhil in the overthe-namter ma:Let (N ASDAQ sym!=>l; [N'.$ Shmt Team Del t (im hnhug ansient p.rtioen ed "Qt t \D*). 'ilw f..ll. ming tal.le sets Imth alw spurtaly Ingh arul Imv slosing lint attutathwes as km, t-1m iltbt ) _ repat..I by N ulP V for the Iwru=ls imlivatnl amt as a<lpntril to ri ftnt a thnv for two stmL split tiln tne \taatti II, l'NI 'Ibe spintata.ns regiscsrs.t instes elraler egiuntats nis, wittunit re tail seu L. y y,.,,penegg) $@ ups, nuik .hmus or tomusuons, aml elo not iransanly repersent actual tramas tan.s. Shareln.hb ri fatudy(2b c.s-ta ven s hst. si.d s ei Cd """"" #" pg A ntiwni.nl,7hfM).tMXhharrt Fust Quante $3% $2% Outst mling. 3.u'G.W slu>n S WI N euial Quanti M 2% Ititainuil Earnisigs EIU
'l hini Q unter 3% 2% $10.'Fil Tot.4 Slurelm.t.lcri E<pnty Fmu th Qu. uter 3% 1%
1979 idhdio*n II2E2
~"
First Quaster .,l,u
. 2 "I 9"dd" 5 2% (1) kv Note 2 to Canolalat *l Fnumi.-l Statennnits.
'"'?"l Thu* Q,urser ,
(2) T1e nunilwr sif skurs ed C4nnam Simi ontstamling rrHis ts a thne for two shd st>ht Vmuth Giu.tcr 8b G cifn tive klaeth 17, luso aiul nthnh s 30.610 s'ecs resennt for stal opthwes grantnl aml 2." LIM sl. ares for stmL options to be grartist ;m.lcs ti.e Cmntuuy's stuk eqdu ptms amt 5fui73 aluan nsasv. I for su puaaw ng u muteil l autt 51,51I slurrs her simL puiluw nghts t.. lw go. ment l'..ud Q u'Ir' 10 % g N1 mal Q,urter gag 7
,,,,g., ,g,,, p,,ng,,,y s sie L purchase pl. n. L c Ivnte 4 to Camsolalaint Viiusu mal Stat.*m ed..
Ihis.1 Qu.nter (thun gh N pte .J.e-r 17, pWy 17 s,<, 9g On N pern.l or 17, PN), the reprrwntative timing 1.e.1.guotatum per sluir of ele Ceunnun. Saml was Sl7's. DIVIDI NDS
'llw Canpmy first gual a c:nh ein hlcml em its Cinunum Sem t in 1972 Amrial e ash Inish euls wvic guhl n ors. erspn t to fiwal ps71 anil 1975 as=1 Irginning in fiwal 197tl tie Omniuny lus luhl apurtraly r.nh .innlce h On Apul 15. IW aml em July 15, 19$60 the C unpany guhl egnaatnly thyninnh ul S tr p r shair, aml em Angmt 2fi. l'W) the lhwant of Derritoss ilnlainl a ebhicml of S P5 gwr si nc f.., tle epuiles pnt rmini, p..yabic (h tober 15. 1980 tu sluichohlen of snunt am Septe mlev 15,19N0 Pun basers of the slurn ultrant twerby will mit le rbgible in nirive ele .in nlceul guyal,l.- nio!.e, 15,19so ser Cm.u. int..tol Statenwns of tunnne amt Notr E t!.r s fo 4
QUADitEX COlll'OllATIOl'8 AND StfilSIDIAltIVS gggggggx q xyg.OltATHIN AND SUllSIDI Altil:S CONSOI.! DATED STA1EhlENT Ol' IN(mlE NOIES lo (.twl.lDATEI) STATEhlEM OF IN(MIE (Im hahmt sentes appliral.fc la unandsted resimis) TI.c full.mmg tum lklatnl statenwnt of imune of Q.ualses G.rp.sathm amt subsiduries for alie live years einled jaoeusv .31, I!N fut larn namnwd tw Artimr A,=hurn & tin.. nulq=$ulent ( A) Itennenes f uth he tlwir eq=wt nwhntal risrulwee in this Prmprtus. *llu twiwtmlatril state,in.nt e,fmhlic 6,inune asumutants, [nr it,c 3;, ,,u,,el, as set' . emi, .wint inIv Jl.1979 amt PM (iiah.chng the irlatal m.in). ...t
*ue Note I to Gmwelidate il l..anaan ial "btatatis als l ***I'a uo.ti. . es.euria.ing tl.e. ( .4mieluies s gnie-anwmtans trihm. m the opinkg. of Qiudres Gap rati.m. all .nlimimentscumieu,1 (wl.icle inch 1.y =l imtedwndent t units, normal pubhe *I lanimu ami n stain significant omi mwn tronimg ailemtuwntsi nr.nw y ta Isrwnt lanly tin- usults inr w h wehnts. This statnno.4 shmik[ hi read t
in sw.tmwtum uitle tl c Inunant statnnents and rel.elat enfrs appeasing etww!wrc its this Pimg=rtus. (g) Ango;,; tin,, Ms Maada cht<J In PM the Ganlunv anpient Ilcalth I'losin Snten".18'r- (*llPS~) 'll*'s l'anw ti'"'. """" J= E8"t'J id=aa!?3. st! f,*J) Inlly elewidwd in Note 7 In G*s'Ji$la8"I fuu"* i *I S8d'C"r"t5 *'" d'"""d"I b" d' d I"* b#-
!!! !T! iS79 t '879 3940 isN
~'~
-Mo"'
'llw Gm*I"Ial"I Stdir*rHe "I I""** '".lmln tir erwlts el op14ti.=n of IlPS in.ly in alw sin nemth
- 0. it uads ewcpi .t a.[ J pu d$ 11 traial n"I"1I"IY 3l I' M Ne t Itannws (Notes A aml !!) _$10.Ill $9,
-~--fos- - -$l2,919 $11,109 $21.105 $8,710
.-- $21.5_23 ~
(c) Estrane.linary Credit Onts aml Esprines: Due at ont of revnmn . 7,194 9,073 Durmg liwal 1979. tlm Onnguay in rimi ert pems rils of $7tP10tu in ewiem eJ t!.c r.nh amenuk r 7.018 9 735 16,467 6,I ll . 15,983 value (nun an imnrams Imlicy nnming tlw wife of mr of fle allhins. S c Note 3 to Guc.oli. Slailrtmg ami adminnteatise ew , la w s 3.184 1,222 1,115 1,8N5 - 2,119 926 1,7NG th 1=n iathan ami anustuathm 229 259 245 luN 2 80 114 259 (D) Net Innune Per Slure aml Gainmm S8m L SPIit intient cywnw INI 201 190 117 129 57 61 Intrint imwne Net innmic Iwr shaec lus Iren nominatest lease,I eel ==* II.e *cegletral aw'44* Hn'al+: l ***n'""' j79) (130) ,jlM4). (28!,1) . (4*l) (209) (245) shavn unist.uulmg ilmmg the fiwal yeais, imhnfmg tl. ihlutive e lint og simL opthen, alare gising
. H.fm 8.57n 10.782 . II fil6 IN,675 ~7,n.") 17,601~ setm.n tne ellert to t!.c Afni L spha diwmwd IJsow. Fully ihlutnl m I im emw t=1 sluec is alw sane as Imune ik in c innmu. Tnes aml En. erPntnl pr8 innme twr shsc.
Ir muilm.ny Canht I,416 l#hi 2.177 - 1.7sl 4,111 IfiN7 3,727 1, glarth 1980, the thund 4 Diinents ant!=nimi a there In, two semL sph guyal.le to slure-Pnwishm f..e linenne Ters 770 555 1.130 892 2,2 HI I,,,hh.,3 or ini id e.n klarmh 17, ; Cat 'llw cI!ni of thh staa L Md at lus Irrn n ensu en. I, o flotnl m ' _ M as , Ipin lenw.w th fare Estrannluuey unht 670 441 1.0 87 871 2,223 Hl2 lyll lin' Onm latatnl Stalemnet nf luonnw. Intr.um luusy Cnit.t-lafe hnuranwe Pim rnis iNote C) - - 7tH - - _ (E) 16htnuts
$ N2 $ I,nll 1%.r to fiwal 1976, di.silnuts une lubl mennully follon hn: tir e l..,c .J . .m le li al 3ra 'l lr Id d $37 f] Mg " " " " ""~" Gunpany anunward pad.4g unaite sty *Inidouls an fiwal Pmi Anwilingh, total sla nt.wls lual N.-t immne l're Slure (Note D): " " "' "" *
ik lasc nts a minus y i nil.t $ 21 $ 17 $ ai . g 29 g 75
" "
- 8 " " ' ' ' " " "# "1""""'"
$3) $ 59 lati.mnInusy nnlit - - ~ .21 - _
$ 21 $ 17 $ 35 $5B $ 75 $ 29 $ 59 I *.mim..n an.1 Gunnum E.pnv.ilent St .un 2.htil.411 2,917,4f.I 2..,9 84.12_7 2_.959.Nn . 2. 9N2.9'rt
._,m ~ .-o 2 *1ti2,7HI om 3..115.190 Itoninnis Per slunc (Notc E) $ n.s. t.u7 $fn $- 1,1 $ 15 $ 10
.. ~ m $. t_t7 m llr a.i.nnpan3 mi i Notrs to Osnwint.ite I State nu nt of lien in. ar. use esitignal uit .I sliis st.itreiwnt.
l 0 7
q : ! 7i 7 .i
- 6 .J t
; - ,1 x c' 65 =
Fx$ 2. =.' i -1I 3- 4
-=
13.9
= r =-
'I I 3s "$ .=
d 33
.b
.=
.3 I 3.- k m .", y' ? s
- j"3 - .E. ;..31y = h.
2 *k $~~;N 5, - k, 4. I ,; a r ;- u
,3 . = ., .,s - 1 3 5 - , q *=
*r
. *=; = ; .c .=
2
=
g -7 . .
= ;=,eG
=s - :e *u
= .g , =
=1 :. =s =
( .- . ; O, =, e = r
= , C lE x
a r s
! 1. =
?2- - -d- 3E4 9 * =
- i. ,'.
1
,s'
'".'8 5j 'y
=
C. , s =i .r* =6.g'. y. I'- d. e / -E -J' J -e
*. 1
. . =- .z. x-= :c;.
!i.l i r=..
*. r Yt--
= ~
-y "= :r
- z. 2 ( r = .e ; & i, Jt M
,- i.
a
- msn 3 _ s, .": y .s r. .2. ,-i ;v. 7 = _, s -
),.-
- = r .. a 5- =
= .s .=*=
/ .= *s N 9 = ..s x a, s. =- = 1. -
9 r. r. 4 . 9 1 _N g
-,3 * .-= 3= 3 e*r =
I= 2. a 3
'a e-a =3 = Q .=: ;
=
e
-s tr . *; ; =. r =
=8 =. 7r
?
=g 2 w i 2' = J - .==!e= 2 r, = := . 6 .z s g-3.=
r 5,=.=.2..-- .. e. .=
; 1 = , z C
." g :- m = == - 7 3gu . g
=
- T,
=
a ef. s.r .=.' 2 " g s i = :; I>,.
/E- -*
= =s ee -
=
s = 3 a,, --f .a. .r . 6 E r r =
- 7. Z
-: "-2 .= -
.k
? .a, .!.- . 4, a r
- -* 68
,9 9: . .
*C. -* ,
-- = =- = w -ar as . , . . r-* . 6 z
=
g -
* = " 3 G = d ~* s g. ; .I C
. =..
93 ( ,. -5.='"- = y= = p x _==.
*g m.
- 5. eq 'E 3 J E ~r b
,m, e
u-
-O J **=. *d, ;: 6t ,3
. E i-z 5 .=t p g p=r
.6""
1 =%= y *r =s .=, s i% ':E i
=
k p 2q s - a r
* * ,k., 1 - .* . *
-. E = *: r.; m =z
.2 2
en s= . = - 5 45 7 lh t 'Q 5 2 g =1 =p a* n3m t x . A5 ,C .d,,. b r ;. ;s . :g=2s23 i . .J w g %. ..= -y. , e E' IP - .
. e. o 3
, r.=4 3 = s -g = ** *r :-
I # r-y
-;,, 3 - a .. g e
=- >, y 2 w =. - r r s x
es e, .as 3
- s 7
- p. yJ z k 3 e
- C . a. ,h
-e
, -mg: r- ?
.r. ==
; /
; 7.-
- = w . -;
es .s -* r 1
* - ;-= *kr* =-. - . 4r *= =. =.*n 7 -n'e n . s
- 4 m 74- ,s - " 7
- p= -
g -3 .= . sr-P ci J 4 I'Tr *=
-S _$
-j 4 ** r= A *
- r . 1 . r
-p ' p' ~
g'
- g
.= 3 "E 9 5. 8 . Y *<E * -* I ~ee
- j,
,i 7) : ci C=
- v. =5- *A.h I. Y= O. *=3.,-= !*b# 9 = -f ". 5 -. 's. '8
- 48
=J i
..v.3) .!
- g 2 .
, _ = -.
r : e .3 2-C -{- w = rg y .3 r.-
. 1,.8 *= : . J - =.= .~
- 1 ;r R .. 2J 's - ey P8,, r,y =r
= C, :P . :; =
2 u 3/ 3 .: =, , 3 . = = .e-g .=. g y . T = 4 g
. = =. .z...=.=,r. ,. ,.. .a : f 7 .,. ,
- 1.,t, ,-
i
. r. ;. - . . ; . * -3.,,. 2 ,, - g w
u . 2 e6n .- . I1*r_ s
= f =. n
. p
- =
x a :L*r
= x -r , ; . J r = k *;
3J 5
*= .m r z E5_,y*-
- 8 ' . " di '5 ** 28
- ay7 =3== s7 *E JA EI=U 6 = E - 2s q;
-=
- e. i- c ,- e 5- ;. r; "E .3.=: y -* g4 : -
j u42-*I - ; J .'y=i
' =
; I*- E .e t .3 L a "5 = ;
.s. p .=-
e'-
~
8 a ::, xs. c .= -i.c y4I R en
- s =i
- )
F,.
.9
; ss t
=
r x- 3.: : .: m* e
, . - : .= .
5 3=;
.- - 3
-=
3 r, _"u. i t3hE:}i
- - t 2 .= , . 3
.U "E d =I -gI
>. , s.
J ? h 3.,3, ,$= ;; ;;y 5r.k 'T;*s '..= ys-r >. 5 s . e .=w x - n .. -e-r.
.f i E .*
-r. .-, . " . ..
m .,. na .- v. - . .a2 u. . ^= -. .r a el 71x - a
- s. .r = = b '8-a = 2
-C; s3 --r. :.i, ,-s 5 t-J 3 '; k=p C -
- g. - -
- : o e.e!- .g 5 =. = ** a. 2' 4 4
=e .-_3.. =t.
2- * > uE' ,u a e 9 M $ I .E *=
- E ,,
*- z. ye , - -I U 9 - -
.I E*
Y -6 ICE "* M f "" E ;2 * }r ! *E [ h
*a I
.= I =
k'hcsk4=* =s Ee er
- s E. e 5 . E !b q .= 7 A -r s u s a 2 - e ? t: .E s *
. g F *E E- , -r E" E O = ,E- .5
- = k .. a> - ; =. .*
- 'a. :. = = $ =x
.= - g , ;u a e 3 ,>
a :., : . .=
=. u r d = .=z r w
. ,- e.g .s
= .; ;6 .r a ..,, :s -.=- , k .w ,
=k wa k5
... C y.- u ,, 2 - s . = . r= g L . 4 .g-
. k
.n :
_- x. r .w
- r - *. . r s
- k. - t k ==. r .= A -. =-
. .. e-, -e, ,S-- uc .s. r -z:
.C = 2 7 s
.3 =
9-g . - . ., u
.s , .a.,- w .2x o . : r.
7. 5r a s _, ..:
. R. . .. s e.-k r.
r
- g .a p u, ;
=- .
e- r. s r3
- r. .
w u. s =r- .>a - .. e
=,,> * .x a.
. r.
- t7 , g n 5 .. =-s y r. ;x,, , , , . .,
x -. 3 - d A ~.2 h l h- 3 h I i h *H = 2 1 s = cer=Te * -= h - tt- =. k
-=
- = g =* . -=
=<6- z
,, J ; s2 u .s g. 2 z e .a. E 3 :E = = .k= = : -
T u.- f.= . =. u s s. u
.3,
. = C
.J!e m.c emo a.. c.a sz
=.
8'. 2-_..= x
. . k s .6r .,
- t. ,5 . - -= - - -s 7. e, r 4 13p'a d3e.
s, e.ee. n. % -m- n. c g
- ==CN=
p :. -
-;yu.
t = =;:; =
=
.=
3 -- r - --e ~~ > a-- ~ -- - -
>n- .
-y w ,, ,= ,
- y
=.. .
.= :, : =
;e6 .h. .i a : = c y = --e rz g n :..g- :
== c .
. e * = E a=
.s .
- t. . = .- .r . 2 .g : .=.- .
r a== .., e. w .5 g-e ne- == no e
- ..=3=,= ; E - - 3. r . a
- t. o .f e en s e,' ;1= : S =
.I - 1 ma* Ti-s e.
_= , ..
>.- na es 3 u cy e-c,. 3s y ,e a = 3
. .z
. .z. ?=e s
=*-
- 2 ,-
. = , _, 2.1 m ; = - = - u,
.a
.=~-
*1
- 3. .
El ke*: k. M=.-. ~=rn x e . , m F-
~
x s .x,
,A. ,
"p a - s a
=
2 =y
= : u.x
- 7. -
= .
t:
- e mP --
a-- c- =ma $ =. =xf=t _A u =-*
*=4e-* *x Cze-. =-- r: x .:z *--- -= = .. : C 6.
[* ,,'l .E. $.- emer-N .- .*
=:
= r g, - e e y e. m x4 = -4 T]*- . e :
,,s e e. e T x
- u, = a.
-eo u 2 e. = , .~.
c== .x g .=
- gPe .c. r u. O
~~ ~~
n% M *.=g ..ka8,.w7 .=.,,
* , y . ;.
-E" 3 s 2,,
.=x 2
- .a .=~ =. 3 .ir.
c55 -E,?si = .. ? ,. ;"7> r. .
.#6 ,s, G "., ca r ; . : u- , ,
e ' y ~.g , ~ ~* , b- ;r. j ij.eoo " e
- in
=
- i
- 3 t- ~ 1 ,a3 .*[ 7 5 r
.-. "o ; * = . - ae ! *=
t ! ~ 7
. =:
t
. w - . s.
- e g *-r.*. -
C ,,;
,E e*- g ,- =e 4-l g 3
~d e *g =*!?? .=';T=y.=.
- . . . ~ -
.z 35 % #'g. * =- - .
6-
-k=x e u .
tt
- r. o. .x.
u , ~1 z z- . r s *.
- *5,.,"
=
, b a,s
;~i: - . ~ l .=;.: 77 -
- m. g .= r 4 -~', m. .Oe t* S M e .P;
*si
>gie
, *# .r =, Mtf) == We : = .I,. 4 ? . .
. =
g;y s ; .= 4 xa,.xg =*: .. x ?e 3 y
= - , 2,. =.~q
- g
.t.
g , E. o -me e 3 == s 2 l m..- g.e. - - c .w.3 =n ;g.S =? _y*..
, E. . -d9 .-.
d *. ..*L 24".1 s. = 7 .=. /. EEe1
.- ". ". 3 . .
. 4 % = ** E .i.-
L
.s p.
i*
- r. ." .- -
- g .
2 t =.= , . # =9
; - * .d .;
** I ,
!g,@
.f..
* - g
,x=-y. x . =* 3 7 5= ,
Y i s - --
"9 g L 9 jeEg-ce oo ee -ow , e g , 30 5 2 < .; k - ,
$. . g L -ed = gr -,4 .= =='- 6= r w
- M
=.
!! c- --
8 i
"= - x d-.k b e. -"
.= .-b.E>En -...z= ee7-ye -=
~g , - - e 7 v.
.== =
33 t z, .2 3-s-r
.jg 2
- u, x., y m
a.e ).,. ( E 8. d.rt .- [ p
=
*
- 2 =d*' .
Ck . = g - g 'T e** * ;.- g., g { a= r.
>,t- s -~-
- J M r T. '
=2
,,x. *~==
z
- g>
r.
.x. -"m
,. . g4 3 -
2 g 1
.o - emw M !
>I. .t..
e4 * * * = E E *g=* ,'E - x J 1 =
- 7.xr "g~*
,.pl~. -* -*cge.H., .m.
ck i
-e'i
+q .= =.'.
~
l Z ..- asr t . e ni -
,- w -. - ,. ;g4 .; ,d. t*'g
- a
= = - x. -z.
=- .7
.d
=
=
~- j .x== x 7,,- ,,f gr,d 7
- e. 4-z% e, ugrf J- .
- n. I S .= . g . -= , s W $ fit .yj ; a~=
aI } t- r. e -- :., , s.
' ,ey y
~ =. . x= .z. .e . . . I =.=.
A .: . e.2.s - s -=a =g.
. f2- ,='q=1=* ; x 4..*T.e = = 3e
*e O D ee ,q Jt e. +
M. .wM w y1- s a 1 e, i , *e S t.m. e - - _i
.m[
a e I t'm a- ,, M h : 3a_. f = , . ~s =.- - . = ..C=- 7 -I - -=-=.g Z J. i ase kN -.*. 5 e ,. - . . g =. .s
-.e
* .- r. ,
n
- ua. = . .
a , .
,ztx y--
4 * -
== 6 w
- d"
- 1 h t
g b . yy.
=
n g- -# = s
. = * >,= =.,.n e .
.? $ - =-
,s 7- *==.,5 g -
4 $ - s
- 1 . =
Wh . -.E [ h =h " *r. -[2
- = k, ; .ev
- x *k .,,' , ,
I b -= *~ v",- -
"t . .
=E M =g 6
b
- t. ==,, . a v Iw $
- t. *.. *c -.=-=*1 . e g" *x
.e = r. w s 2 . -
.r
* ?
_m
.=
g 6 e . "3 *b *
=e =.
- T e
'::k= ,.- ~ =-..:: - .: -- .=.
- g
' Tis !3- :h w f ! {" 2 g s j y *= Eg
! r: '~ r *d,-- >
- =
s - -!F -
- 1
. ? c--. J=
e ki.s E F !- 2. G
, e.2 N*33*I::a c'M If 3 m i8 !
l 5 j i 2 :E 5 2x ?? !,+x
- .: 3 C .; J 0 : -
= j = ; 3 ? E " 'i i E i, -~ E -
4 4: -ii a c 6. I-3. .- j i. == = .,E, ? 7 ? *~5,
= k s ; .= e c .=
1 y b53 * .p-El E 2 g =! = *.bI- . E fB 4 h J =,= =7.=y- *$ $ . 2,, j j e O o
~ ~ ~ ^
WT % ; c,
~
t
, s s
. w
, s
.~
, Q- . 4 ' -i i
v4
.c e ,
~
l; twrerntage [: a's a ofgwnentage ofI.yseven ws amiinun 8.5eb to 99%[This hirrease'is attnlmtahic "I"" psimarily to* the l.wer I"""'"* l
~ -' ' '
rrvnmes neursentril markethig ailministrative rymews' . Qumtrily we henne " ' " "' "'"" l*" **"# ' "8
"' "" " '" '" " "' " " " * * '"UE" " "**
Ef . $U,l per$ trl sluri aml $ D's forpSwal r slure in pNeo a4 $ 43,spa$ ten el.c. omqueal.le 16.of S Eual21. 1979 amlSrc$.22 Nute 9nurnpunts t.. Omw.h.latnto $ ofi (lwime'rstaantalm.ny I
- unht)h
"""#'""***""It**"
- * " " " *I"' "* "" "'"*"I ** '
l 7 n.umtaI st.an,w.c. .
~
k" P '""I""had
='e*"Y $t "* hale *8a u"' ""h'w' ' " ' " ' ""na "au h'='. arar"'ad are8'a' =~'
, netwr putir8tunts 8H II* 'ad Irat Pewer kuhnte r."'"'* . ,
; Fiscal 1979 Coinpared to Fiscal 1978 'llmmgh a sulnklimy acquient n Dunary !?iNo, alw Onnpany also prnykles r.ulnwhve densa:
. He rinws nwie.esed 1.y 3seb, Inun $l2.919.000 in $13pa.0tG, pim.uity luvanw ed a higlier faminathm wrvites aml cepiipownt.. In mahlstem, ihn Omqueny affers enghwering amt tesleiral-S fee sc hninic, Clurgrahic funns rcmanwd earntully tlw same. as the. guine year. Itevennes frmn; soviers tu elm fansil hwl alcitric imwcr gnwsati6n. imlnstry.
, d.mnaic nwunwrcial clwnes huraml. Itrvemws femn guvnnnwnt umtruts amt intnnadonal clients ',"g"'
- i. sicerentwd I y 30% amt 10% rngwetevely I
' As of Angust 1980 elwer were a tural J 106 ilunntic innlear power plants in etw planning, I? - Ducet' unt of revemics increaseil 7.3"$. frinu $9 073 tWU . to $9.735.UIM, aml hersrasnl as ' a .' dnign aml umsinut m stage, amt 73 3. lams Im+nnt Inr ognvatimo Plants hirisml im tantnwtum
! . Inwntage c4 revemws, fimn 702",, to 72 0"*. c TI.ese iewrc.sw s wne attrihntable to staff incrcas.s
. mir espstnt to Iw nmqilreal by 1990 awl amid trig Ae alm esisting ihmeestic chrtrical untput i4 tlw
' in II.c casiv part of fiwal 1979 in antinparum of imreasing wmLt.uils %I:n h ali.I su e nutee6alise nmkar p,wer plants twsnaly in s pution. Owenstly' mntrar :=wer pimds gn nlmr agqmni.euersy _
. nneel alw tweinning of Escal Imo 10.5 pertrait nf ahuintic riertsicalinstest
'4
.iltelding and ailministrative.engentes imveawd 312% fran' $1,415.000 en $1/iss.fue, amt lle design, umstmetam, startup, imiinenunce amt operathms ad a miticar :=wer pl.mt be the l 7 inercaml at a percentage of revennes, fran 11.0"i. to it.lill.e ont ha reaws were atteilmtable United States is a nnqba emt amtly malertaking requhing intensive engineering services. blanagee i to inwrresing salasics aml utlwr rynmes, esp.iinled mnwas inadeting 4-lhnts amt the ugmiing L nm.t lelieves slut at nurent luiars a metalsey will inved laetwares inw fullkm amt one aml eser lulf .
i- of new reganut ofGres. The immease ni madraing ami administrative nnes as a p nentage of 1.illi.m dpilans to nmstruct a one tinmamt nwgawatt tilant ami that approssmately ten perinet of ,, q- > revesuws ss alue attulmtalite to flee sknver growtle he seremws entwricewed during fiwal 1979. as - _ ' tle anst ed a new plant is hwmred hir planning, desigit engimvring, asulysis, enting, speahry rerww . cmnguent to Escal 1978. . . and relatni werkn. b . Internt espenws decreawd M 4%. fenm $190,0im to $117.tnin, ami depen-lati.m aint annutica. " " " ' " " " " ' " " " " " ' ' ' " * ' " " '" " *" I ' " '""" I * " , tinn derrraml 2:12%, frenn $24't,0lO to $l981.000, barause e4 alse cancellatkm of a capitalient lease. """"' "'P""'"'"I"""#'***'"" """'""P " * * " " " '"""E"'" " the plant's Imty yrar onwratamal life; 11.nmelumt a plant s uprinsunut hfe, spreieberal engierrring . l l ; in elec Onnguny's enh avadable fur ' investments. Interest mnew mereased 57.1%, fromand in.imical wrviers
$158.0nn to $2N9.are rnpiral, these infinic Hee, prinuiity asgurliaratiini a remit ed aseil aninhuicase ple n.rietatione e.f gwsati.ig inne
. ,wgo,y,, py,,,,,,g ,,,ing,g,,,,io,.sw.ine, enting, smuipnwnt anni ro.ngunirset gi.1fense anar anel retil.irr .,
l- tenome, laws hw Swal 1979 repsewntal an ellective las sate of Sufi% (wittumt nmsielceati.m nwnt asulysis, thumtaminutism wevirrs amt sun icar furt stur. ige ami dhpnal in a.kletam, ele lvent - l ' of alw ntsamdnusy nedit) cenngurnt to an clin-tsvc sate of 51 W;i. Im fiwal 1975.11w thstrasce of sww amt ingmard inlun.logirs ami the kin.4 licatum of sww safety unarsus nur inpiec negin l ? ws4 due su job tas ornhts arhmg fsmn inwreaml 1.hing amt dn$raml an=Inl wtible esimnes
" norrmg wavins erlaimg to the re Inigns of, nr sternEts m sielwr iminoveneds to, nistmg sysenns an.I :
( fur hfe imurame premnuns em ti.e hves of certain guinnial sharvin.hn.it nwnpunsits as well as plant suminns - f Net intune ietreawd by 5n0%, fumi $1.047,0:n to $1,5'in,0tn prinurity leccame of an estrace-
~
ennhwning
- terlin al shn man n a a nurtrar Ine I at an' Fna yle
- l. . : dmary unlit of $7th. Din ($ 24 per stiarr) Imm hfe insuraner pimuits. Sec Nute C to Omsn!klatal nl y w nH n wnukes, the an hitre tural-engunvaing linus ulne . nastnu t IIn, gelant, .
S1tenwns of hmmw. Imimee lefmc tlw estraordinary crnht ihreraml as a getrutage of sevnmes "" "'I"""d "" "' " " " * ' * ' " " " ' " " ' " * ~ ' " ' " ""
- frun &l% to 6.5% as a enuir of higlwr dernt ones amt madreing amt administrative ispieses.-
*" " '"PP""' '"k" "'I ** "#"I""'*"' "'""3""
'""""'l '*** " " "N"" "E ""
- ami piping analpisi uwh eenein s an aho gnovi.Inl by imicimalent srs.rkr owngunics hLe Quatres '
1 Herent Quinterly Results . aml its nunprtisms. Imleswmlent wrvkw nuagunin alw provhic wr iers ulwn the engiureting staffs -
, The inti ming tr'de snuunarius the Gm.pany's .npvating snults for the fiest tw., apartns of ' of tlw architertmaleighwning hemi amt utihtws are twing Inlly unhent. *lhe Guntuny's. im. fit-( - Escal t9il (in el msamts). 14,w n, .,, w,,n,t o, nn abihty eleinsuls ene its al lity su entuwal to n unmlwr of umqwtitive fartms, imhntmg gunnuml '
Ea* l - l' a*J availability, the meture. of flw wmL. al.c caguluhty of its twrumurl regmt4 Hem anal gnhr. h ' Agnel Jn,' tune ' l'rrieme nt - -July 3 t, ltme , sacu, i ng . tilmaint eed t - He rnne. stin la,lt it, ,, ,,Onnt wt etie ns., #
' Not Itevnnws '$1n.122 temy:1, ' $11. tm Itubr;,' T3r n*Ivar P'*r' i 'dmiry is me of the unest higl.ly te gulateil imlessics in Iln- Linient States j' I)nnt ont of enrmecs 7cut2 711 afMI g 71.9 ami lus Inui elic unbjcit of im trawal gml.lw, pirate aml guvannwntal uintiny, rulmi uting um>t .
l hladiting and aihnumerative espenws 424 9.2 H52 7.5 - rundly in alw r. puts aml reunimentathms rm.nusing Innu semtws of tlw hlar h 1979 Tlure hide . Other esgemes (net) .01 12
] Otl Oil gg,,g ,n.;,gn,, 3, a acwdt ut this wantinyj nmservatism aml limer'st.an psojnsed gn=tle in e he : . Im enw lefmc I ntmw Tasrs $ l.7No 17 6 $ 1 dI7 17.1 trie power ninmmpham,' em erw mwir r pmer plants lease Imn kilunt alimwui. ally io llw gust
! f Net Inn ,e $ 87.g n ts ' $ . m7 g,4 - two years In aikidi.m. many of sk pLwas in alw design ami'omstun1hm usagn base luit etnir Not Imume P.Lr Sturc s
'M 71'i min *aI hn=<abics e* mini .hw to im nwn! regulatmy er iniinmi ts aml elrla3s in uhtaining om- , s,
,, 10 13 J'
M4 t. i _ _ - . - , - . .
j . , L .
.JA- ,
g ;, u s I $ h sinu 1km permits aml operatmg hsenses Inan the Newk at licgulatory Gunminkm ("N!!C'), the susrewor to etw Atomic l'swegy Gunmissann " in August 120 .m aqwratmg lurme was inuical to # 3"I"'IP 'I ""I' '"""'d f *I""'I by d.e Gunpany are sledast aus.c f uHy lwluw.
~
V2guna IClettra Puwer Cimiguny fur a siew seistirar piewer pl.ent, flut fiast unti ogwrating Inrnse - 11phig Andsis Sers&cs. ' Of partkular knguttance to the safety of tlic mwirar gamer plant is alie tsunti since Septemlwr 197N.
- design amt ism.stanothm ed its gsigang specms amt relatal sugquets. NinIrar inut.istay nal.g sear ilards, tNotwidistamhng thee prolle ns and th a hing i :t Js, tl.e demamt for serialized engincesing azul regulati m.s requiere rigurmis piping systein asulyses in order to assure slut the systnns tan sustain
- scr9cs, suel, as pigung aiulpis' has imrcasnt as' Nulatory enpurenwnts have twen tightrurtl ami the stresses resulting from laith mermal ami alnu.emal operating coeulitium. Tlie Gmquny's espertise argeneral saidygnarrns have prompted tbc utshaws en autlawize a 1.igher level of design aml ha the arca of piping systems design nial ainalysis cinisists of its enghwraing gwtsninsel aiul its gun- .
analysis warf 'ikse'f.eders .uunmt peinunty for the gmwth in raginnving laisnwss. Primary guictary nmymtcr software progsams. W4hin the last cigliteen inunths the Gmquny has respmded . Iwneliriaries of .this inricasal .JL.nl huhule the imleprinlent engnwering scivire organisatiims to the hiercasal denusul for tinis service by actively gmesuing anders for wat of tl.is agpc aml smh as Qiw!rn Ahlump's the Gnngunfs Imsiewss has nwerawd substan 6dly during the past twn expanding its professiimal staff. The Gunguny's increased revemws over tie gust twrive nuweths are
' ' yeara. 6a the last two Kwal spierters the Omnpany's revenue growth has sh wed. See "klanagement's attralmtable in large part to piping systun design amt analysis gushunust by the Gunpany.
IWitudt6n"an.1 Analysis of Gmmlulatal Statenwns of tirmne" aml "hfadeting arul lladiog" A iNLn Mg in verall densamt for these sesvices or an inwicased avadahihty of utihty persomwl Enginecting Senues, in meldithm tu the piping design and analysis wmL desreihed ahnvc, the (. r Gunpany's engincrsing servkes in.lve the slesign am' analysis ad ottwr equipnwnt aval sinniural
;'u.d archiccanral engissning gwrunmal suuhl alwi luve an advnse inque t on the alenund for . ~
k Q.u. Ins's snvin s and on its runent level of profitalnhty. nunt=wents ami symmns of a. mu lear parr tilant. In unter to lankl a inulcar gewer plant the utshty. T Enginerring amt Tutmical Sersk es Provktnt by Qinadres to the Nmlear Pnwer Imlustry **""d'inator umst oldain ' a constnw hen ' perniit inwn the N!!C aml befoic the plant can he The Gmquny's wivkrs uqq=nt all g>h=> d de plamang ami alcsign, nuatnittum ami startup, "I""I ""'st adain an opnahng lurnm ur Gunpany gnovides teclaiical assistamy to its stwids srut operation amt nuintename of nialcar power plants. The following table sunnuariers alm _ services in obtaining W die etnudun gennt aml ciwraung kenw and in oldaening fnun odut inhal offered by the Comguny.
**I le Envenunent agem*s any odin turnws n pumHs wliicle snay k rugnin4 to ennstnqi and operate the malcar power facility. The Omnpany alsu assists in <!cul quing psobet masugrumet s._e.se. .I .rt e r. .n.ie_.e sm. k_ n_- o#m_a_r go..J_,es.
contrdt nmstnwtion schedule and Inutgetary nmtrol syste ms aml quahty asu ra, ice programs.1..nully, Pinanu, g an.I Design Pre lwration ofa communic
. iaradesis:ic mtwa r , leasihihty' emin=nnental aint site the Gnnpany pnwides imirix ndent engineering dru.gn review of the eqwratimul safety 64 plant Projet t stall trainmg Sy5t"ns, sinutures amt unngunnsits, a resiew scquirnt by NitC regulathnis aml uunut engineer 6ng Preparatkm s.f eminumer.Jat ami safety analyses amt teck practices.
nical retwnts in enmastiim with luensing for nuutnwtion Puparatims of quahey assuraine pmgr.nns and prunlurcs Plant Startup Scrthes. Ilefuse a umicar imwcr plant is germittnl .to generate power, the nun-anal peshnnianwe of misdits plcted plasit unut le insgurtnl aint tested. 'llic Oninluny assists si the pacparation asul prefieresi.tiite Engimrsing srive rs, intimling piping system design amt of the staitup inograni and the interpretathm ami evaluatinn of test resn!ts ta detrunne omhanume analysis relatins tu pl. net design to design objn tives and licensing requirements. In ulIering alww scevkrs, the Gunpany can pnnide Cainstrascilms anel Piases Starenp , Guntrewtum nurugerne-nt, imimhng planning, scheduling. snptwat for the alient's own startup aganisatimi, or can act as ais imh wohle ut agrnt n stwaisitile fair 1 amt unt umttnl Prop.eratuns of unistriu tkne test progr.usis Sitc apuhty nmisul, insmitum, amt ambts Plant Operathms Sup;mrt Scicices. The Gunp.my assists utihty alients ihning the ogwiati.m of Pwguratum sif envirmmin.tal ain] safety analysrs arul tecle. a pl. int by providing sywratimes supgwist wrykys rol.atmg in mainterusur, srnail m.nugrna ut, admin-nital nthuts he caumn tams with lwrnsmg for operathm Pravywratism.at ami st.ntup trst pl.neuting, scheduhng, per- . "'- "'1" " " ' ' " " "*" " "N' "" ' " " " * " "" '"UI"" ' #
- Inruusw e aml evaluatum imhede tlie elevelogmwnt of cannputcrlin) systnm for pl."mning the scepwnsv of fads in iw twr-Pleas Mainscnance an.I Operasi.in Plant eqwrations suppint wivi<rs, imimhng psa1uradon of fainnt during plant asperatum and < luring plant shutdum Tie Guntuny also dentinps amt installs plant ogwratum pnnntures (hnhahng tunnui awl ah- wnnd m.nugnm ut systnns br the organinthm, fihng, minnfilming ami samage el rmuds f.or ca h suienul systnn oiwratiwn) ami pnu nluns for nuinte- pt.mi ,, qui,nl by g<werunwntal wgulatims. Intnws and imimtey sales ami stamlantt 'lle Gingun> s sunec, survrillame tesemg, .idmunstrau e nu.tcil, plant One Ittomtming System supplies cyumlat infi nutuni naursuing pl.mt atal hwl nur stat us we mity am! rmergrm y plannh.g '
Trainmg ami simulaenin 'I"""gh data n tenwal and n=npuen udtusne pengeanis devrinent liy the Ganiuny. Fuel nunagenwnt, im tmhng fuel lesi,n a seview and de el. Pnimlir plant ingwrtiom nunt tw naal.nini dming eqwr.itism in elenmmirate nanpli.nue mile opnwnt of nue nunagement in hniqiws.
*I"'iI "I*'i"E M*fications to whh h n pl.mt as hnmnl by tie NitC. Qua. hrs punistra Furi nunnia tming uimnitatism 'I"'
Plant n==hfic.itum .md ingwnvrinent, imlmimg e.piigunent '"I"'iI $"Pinn t scevurs to its alwnes in the d.rvlignm ut amt impinewnf atum of 1.rlmk al au me.
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V p a . m3 4 As wired alave.11, time amt nutniah naitiatts peramt alw Omquny's e twnts to mmhir tlie ; imiilents at forngn facihties as it lus with renwit to tfmtcil Statrs fatihtics. See Clwnts-Gn tuning, nature, ami anumut of wrviers to tw remh,nl lay tier unnpany, aml I edh enws e4 nastraits i tsacts weh Clwnts." pnmit alw <%it to termi ute entualy ilm gwiheemam e of w,vurs ley tlw Oanjuny. Anuaihm ty, elic I:ngineering a: J Teilmical Services Provhled to slee l'ossil Fuct Power Cencration Industry imheatal basLlog cannot le umsklesnl a inm luttbg P st entriw=r nala ates. laiwesn, tisat a significant :=ntions of tlw revimws regurutital by wide b,wilog wdl lw realieril. 11 e bmklers amt ogwratias of Imsil Inct tmwer plants have not histmically rcepiirnt signifcant anunmes of wiskrs of specialued engnenmg Eems like those wlui serve tle mulce pnwrr imhistry. Apinusinutely $1.myiOO of tie f.;nting at July 31,1Ti0 relwew,itnl mik,s Ivan Sargnet Altl/augh to elate Qiudire's revnnws in this area have not turn significant, tlw ii ncasisig amt, segula. & lannly l?ngenters for tle pignent analysis serviers tu Im gwifismes! eu, en liner ain! esiatraials luds thui Iml tsnnplenty i.I losul fiwl pl.ints lus leil many arthitettnral rngineering firms and utihties fur t!w twn laSalle mwlear gewer plants tring puntruitnl few Omunumwe.dtle Fahum Ounguay. to Irgin tu utdue tle scnkrs of Qiudres .imt its tuseigwtitors. Scc"Clwnts." At july 31,1979 aml januaey 31.19Sil, Sargnet & l.muly ((nguntn orperwntnl WMlltH and $9#n,(Mui, renwetncly, nf the umqunyi I,.n Llog. 'Ihc Onngunv anthipates t!ut afunat all e4 CompetElon tim Saignit & I,mily baillog at jnly 31, l'ho will tw nmydrent lay jumary 31, latit. Attlunigh The maint competitive f.ntons in the nuelcar engineering services 6ntlustry are avadability aml "hl'tieaul I*"Li"Es dre e'l*"I I""" S "M""' & I ""IY I'"M""* 'I* U""Pd"Y '""I*Ie '"
. l*It the 8""nmt or timing of this in ,any utlwr bminen that might septwe time nunnit Lsgent &
capabihty of persanwl, performamr, reputation, ==1 pnsr of sersices. Ilecame the cost of the Com-1.umly h.nLbg. In the evcut the umquny is unable to replate ele revnnws gnwrated by the guny's sesvises is generally a sconulary consiileratum trlative to the Imrtiam gwifinnwd price is genwra.Ily a less significant (tunpetitive fartin stian time others titnl. Tlie Oneigueiy co ngwtes witle Id'Me l*'l4 A G"Pd"O I""kM4 "*M k d'bMY "bN rtlwes for varions aqwds of its business, buludmg apiuminutely 15 large aralitn sural-engineering firms and apprmimately 8 to 10 large specialized e nginening and service fams, many of which hove Perunmel greater Gnaiuial reuncrs than the Company. In addition, ut htirs use using tlwir own perunuwl to g),, g,ngu,,yi twhwip.d resonne is its professimulI wouanul, anal. .n=Imely. Llw Dantianis pcshnm sinne e,f the se vites wluch previim 1y luve twen twovided to them by others, iiwimling siwcess is rel.ited 'n large part to the smrcssin! apptwatum of t1wn talents ami dill, la tie per. tie Onnpmy. Althougli enmpetitum among sinr64 heed malcar engineering fisms is inteme, it" hinnainc of the Comp.my's servurs.11 e following table wts fmth tle membre nei engnu res. Ownguny beheses that it usupies a favorable nunpetitise Insitism became of its enghw-sing ,;mi,r,c amt professimul nnployns, alw muntwr e4 subnmeraient engincraing ami snimital prr-capertise, twefonname reowd, gwesormel capabihty. and nunpctitive priers, sumwl and alw intal smtuler i,f all employees amt sulemtrattnl g%,umswl as of slw imtwatnt dates. 3,si,,, at, 3,sie.n, at, J,,,, a t ,
%c independent mwlear engmerring firms rely uptm the utihties, the archirertural engincning 1879 1958 IS9'
- firns and the ergwpnent suppliers to provide mmt of tin,r revenues. When circumstames gwrmit, th* gip!'eae time negameatium will utshee tleir own staff to swiform fum-tions whkh Quadres aml the ollwr l{nginn,s Scientific ami pudessiimal I?mployres IW M 3'87 im!cpeminit rugierreing firms nmhl alun pr:Imm. In addithm, wlwn the engawering staff empbynl Sulemtrartnl Fngnwering amt Teilmkul Perumnet in 92 IW hy the an hitettural engiewermg firms ami capiipment suppfwss are available, tlww linus af ten laid p gg 4g g
.y.
fe:c the sintialueil enguenmg tads normally perlmned by im!cpenilent rugiurering fums. The abwnee of orders hw m w malcar Inwer plants in slic past two years amt tie delays espnicuerd %c Guntuny's engineering. scientilk amt professnaul stall have I .n tgn=nal, in um trar. inwaliaiik al, iliitrical, alwniir.il, sne t.illurgic.d. scisnek, stein tiinal aiil <isil signiersing a* still .n by show plants in the design and nmstnn-teini stage s lias greally sin reased Qiiadera's onngwritiini. envinnmwntal impact analysis anel plant training.' eiwiugenent aint ogn eatie.es. 'lle uilainitiai t d p.nticularly fnen cipngnnent supphers. Sce Im!mtey." gerum,wl omaist mainly of rugincen retainnt im a temimw.ny or suotn e erlated lu6 T3pirally. the basis on which sucht wsumnel air irtainnl results in a higlwr dun t ont he ib.ngcable inmes Marl 1 ting and Ilarkbg af wmL niforned. Dmmg pnnah ul entmed denumi for alw Gunpanis wnnes, On.nbrs nun-i In the llnered St.itrs Quaihez markets afs serviers principally through its dircot sales force agenwnt attempts tu minimise the Laynlls of its prinunent psofenhauh. .lle Genp.im m.unt aim boatnl at the L,anpany, headipurters m Camphell, Cahfurni. amt its regiimal oll.wes m Tnisa, insny, onifidentiahty ami te.nic wnst agironwnts with nuny i4 its empli.urs amt suhim a as tnl Ok lahe wn.t, pittdmtgIt, perimylv.mia and (,am.esulle,1lorkla. *llic L.unpany is m. tlic prmrss nf gerunnwl. ,t,he L,iniquny shws not, himrver, hat e any i tlwr agertsewnts ersten tmg imitu latie n nimai eqwning another ergiinul olhoc sn lisihlaiul, Washmgtml. Overw.is the Counpany historir. illy lus trnninatism with the Gmquny G,rewrally umh-r Cahligena I.sw emploire iam nuntwtuum .ignrnwnts utdant imlegerilent marketmg reprewnf atives, however, rnrutly the Gunpany a.s twgisming to "'"'"#"'"""' ' utdue its own emplnyces beated in Switerrland aml Taiwan. Sct lueth below is information with reywot en the GungunyiImklog. patents and Trademarks tlailles Altlemgh the Cumpany lus thnr patents nwrting its spent fml sensage i.uk eksigin luo pal-IW ruts twmbug with usin,t to slic itenuitanmutum npiismu, t oltrant le> lip 5. aml tinre leadenuits. July 31.1979 $22.Nx) tux) NUplPl{, I'lPF.!LUp ami l'lLTilltttS r with reywe t to its pipmg aiulps, nunimin rudes, www of Jamury :ll,19N) .w Maxjpri July 11, 19N) 27/200 pin the fintgoing air matnial in alw Gmquny's limimw 17 16
r- , - - - - - f g Sp ; , g .m. L
' ~ ), t EJ y,.p,,,s,s nIANAClulF.NT '
Tlie O mtung eiwns apinoismately 5511:10 siiuare int of silky spatv in C mpt=II, Cihfornia : ' Directors, Otlii ers, aml Piincipal Fasiplayers . Inidt in Pyl5 aml Ica=rs an ads.ntut 19.010 s pure feet. A 16.700 wpiaer faut malduni en the newswil < g.,,,;, inimuutino with entatt to the diristnes, ollkm, and piincip.nl pinfrsunut aim! netwr property is espirent to lie aang& sal later this year.11.c Onupany has twen imeirusl by the Imikhug
. p.miiieu l rmployal ley de Geir kiy is u t fastle lirkow.
atmiradear that are .xnerretchmtasessi m istle the immdation seul slali e4 tlic a&htiun does mit mesi , elesign sp111iratinns The Gmquny is ~ invntigating this devoligmismt anil is cimeneipl.iting tlie ~ nm i. . yMa remnths available la it,' huhuhang gmsulle Irgal adhesi.' This develigmnsif will delay ins 1q aewy; t** mms' he ' I
~ lanvever, tlw 'rstreet isl the dclay a ul tier im3urt im the strnrtural integrity 'of fle Imildmg are - - -
~ -.
Steinun Naymark . 60 - 3') - In ~ Prisiilent ami l)irn am imt Limwn at this smic. This alciay in unnpletion lus causnt the Ciantuny attively to urL alternate ; 31 ; Senior Viw prni&14 :
'llunnas J. l'ades 61 10 -
t angwry sture. Itrganial nHins leased by Qiuar a in Tulsa, OLI4tunna and Pitidangli, Pennsylvania surnpy rppnnimately 2.5te wtuare fret aml 3,0lM wpure feet, rnpretively. The Gunpany is in the- . jnlisi W. I.ingalciter 53 , .-2') .10 , P"i '" '"' r. In ,
' % enr Vere gwurns of ogwning reghnut offiers in Ilichlami, Washington, Zurich, Switzestand, aml Taipei, Taiwan.
- Its subskliary,!!PS,Irases approiimately 2.300 sepure hrt fur olices and pproilmately 4.000 sviuare gnaniusemut ongnatiini, feet for wa.chnuse latilitics in Camesvdle, Fhnida. mal 1)iin tor ,
. jules Pcmiman . 44 ' NA f NA lhristen q I Commitments Itmuki 1. NaymmL '35 10 ~ 10 ~ Vice Prnident, Propst Managenwnt aml .
The Gunpany has recently purchased the esclusive annmercial rights to certa.m etertropoli&ing p,n ,,, tishnology at intomls to utihse to espamt its capahihty to provide thumtambiatsm amt railuuttive g y y, - 50 NA NA t hru tur - waste inhectum servwes and eepiipnent In esclunge for this tri.lmology, the Gunpany has agreal . g,hm R Muffat 50 NA NA ' Dientor I:s guy $250.tllO nusently aml an a&htional $250jMM he evpul u1niantmal innstallnwnts itannwswing th I .c Kanns 50 NA NA t hut tur july PMI In adlithne, the Gunguny is chhgatetl to purtiuse testnuiral wrvices at Ile rate of $50.0 0 lintust II. Demgney . 54 25 / '5 Sniint Ykr Pinklent, iis 1950 aml $100.tm per talemlar year over the nest sevres ye. ors asul guy a royaCly beginining Ogws ationes July I,19T) em all saln and services utilizing such tettinnlagy. Sec Note 5 to Gmmlidaint Fhiancial . John L Wray 45 ' 22 2' Vwo Pinklcut. lGegn. vring
$tatements. Anton F. Kitz 34 Il 5, Ykw Prnklcut. ht.nkrting Joseph F. Cony '. 45 NA 8- Sn treasy mimi Claici Fuum tal Olkre Dinukl A. Culdstein ~ 46 'NA 3 Diantor of Ailministiathe aml Pnwanwl jmeph A. Capella 48 . 15 - I Prnutent of Ilralti -
Pt ipu s eptenn, S law. NA= Not Applicahic.
. Biographical Data
' Slweenats Nayma:L was nee of alw elirre finnulers of the Gimpany ami lus wrvol as its Pres-blent siene its imnelunatism in 1W0. Ile lus p.uticipatal in alw Unitol heales Navy mulcar ino-giain as Chief of tlie Atmnic IGwegy Onnmissim 's Chr.ign Operatiinn Naval Iteattor liramli amt as Senior minitist at ole Arginim Natimul I.alunatory luring the ArrIntmwns of tle mulcar pin-put,6em plant for ele USS Nautilus. Piim to funning the Conquny, le wmtal for Gnwral l:In trie -
Ownpany (*CIC) in a v.uirty .4 nmicar nigimvring amt management =mtiims amt was hlan-
. ager of IG.gimreing for its tmuLry umicar plant peopsis. Ele is a twidewiemul engnavr with imme than 39 yran' cynsinar in alw ilesign. nmsenuinm ami egwsatism of enulcar amt al=1auli nwrr pl.nds, lir Ichts llS ami MS ilegiers m rugiurening.
'llumus J. Padurs is ;aimilwr fummIrr of ele Gunpany amt h.es warnt as .in olkrr sinn-huversiathm, tw is me of tie Sclhng Sliairlinkins ite is a pmfrwunut netuurr mich nunc slun
' 29 yrns of capnience in the ilnign, sow.tinttism, ami igwiathm e4 nmicar p wor pLmts, of whi h as 39 :
t . sl e gl s - y h m tiut
. etne miw s l I inbic g t h rol wk s ie ly n h om a w lwsu G i.n l
ta tce Fs a m . ino s.c i m s e n s tcm s a -u e u m r. y l is s n o gi r el r gd lp n uk D iny i i ng n A wm u t G i ss a itn ia n r el n
,l a eph a cs e r rs . e nn P me r nh n P k ahi w i
r rita a g . e go icha a l l igS yi n r e n c l sa us - i l mtnauG i e ir e tr k ed iv En d i ng i a e ph m, e nQfo in u e nalpde ts r p s e l a a ta ts inrte t idu r h m ng gnm s r a ig c t r e l on is c t A w p f irUht o i tnl e i f e adi e di n g n t a ai r n a oi ini e s r lo yn f c o n l is s ndm inmjv G e Ie. th imk biwitr i 15 h. n nf r eD l. I ii ni na a l r n s mrlo w b ig h oo hih a t e p t f t iu A s le au
,l n
n p nf a goe f ty m a m&h n e n e f a r I ! w S u n e nn ,f a g y - hn i oe .! rh t ei yni e ek iw rl i ik s s n r mn d y n er d i n an i.n er l r k n .d s to7 tots ig a a s, . a p wa n ce n pnning i c1 n ik nt em r o O n uc i re ndE a cd Dhia n nt nkQgg l a f ny n Of din eic uaiO ii s n h e 9i oS pI S s
'y e r t t
yi e. iogo sl ne ts 1 e r a eh ni s . e r s e ht e vnFtsws c f t a e a napulrmpe r on s s s i f a t f b nio m te 2 f o pC ,re o pd d n i r gl t o i r ph ta lm ng nl o u s a a. n u S tnmah Gh mirso ncs t A u e y, g e e l aS I dc e n c id l na dAdi sI a e e et y n il s S in m i. a ic mvea ig n Pr u ed h t e g l k Pr r el h . t a t S Pl s n a s e A y
. mag -
s, ry y h En nw I hu l ini e nd h u n eet in ich ru r a i iemd c i stn lt nar gai r s cl e ml e g f h o e Fr t a pc s a a i d p
. t t il wnn V npmt Va e A,lim r n tnl te d r e aiu gi nd e tn a e a e nu ly e min m
ly e S n ed s t w r. i c i sDilme t s dhl is dt i ib rn. irmr mt ce i ne i iP tnoi t i n n e e oe t is e iwe e r c nh mI t r y mr mnn ol u e a Ph u I. e f v ,p o r I o - pAel gni e s s ret ai n W(mlnl s e t s m n r p ao r ia h Ch e t
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- i m ahi se n oi w vf n o n nppyg a lai s e19 irOc p e to ir l oh r n pGd e a p oa e ko is p pr h lI n
t nt w l s c f omrk leisu MnG Dl r lm e 1u r o r rP e o i r Eh e iy Di n a c w elo oGac i
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l mf op ai y nf o te r s a n igwCn h ygh t h a d ihNo ea wi mn o p s!
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,u n pt g t nf inloiap pl l t
l,c s ecl s inhs l isla a s d p m. m ut omp a a f e e i r lai le fo3 hf o 1 s wisn a aninh a c e l r kt b nmirs o re g J a a h a nionmua md fo eni f s lpr s ny s c m S ht ei e e P h r eC os Ci e r i a r nl egA Cw s elu m s e s oc nal g t i t t h na ineh t n lmigaieh ic n mo i a tc ve n e rau r e ah l intiac v e t ci gis ty f h ona nte kmanl sii n its l Cgt u c ni c a er nah tah eP Ce r eb pt n re w a inndunn o e yi aEr ,mt t t e d iv "e r s s mig n l a s Vy uiir v t f n e idsewe ml s ow h . n lmg diei.r r a ,i ya o n n mly akm nrm tore ogno e ed lt hCeir ipse ah ig a n Gf mirS !oaa l a n af pa s n ce cn e c i tn DnU rh
, y oen i
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,t S a u e o n a n wmar oil n r pt t
is a is p n g rh a NmDr g r n s n al n. pe s a eCh a Imlh Pda e t h e uc wt n e e a mnd n iwsC am pe anna e t inh c m sid e ai c nmir m.n ngoad ef n e oin On ci s e n e mg supma tne und r eI i m.P ht toSg r ur h r o nDoe r a a nnd mSl Ck i a s ht Fr nt ea u a o an ev e os r k y m Gs t mS Ca w e k .r yes hu foa h c e a eP ra p E o e s, s i t r hCn5 p e a i n tn na radk i S t y e i2 o ol yk .ib icl dr r gi i a e a t el hb y e e m s t co l h ve a r h k on t e my e o
,8 f gi rpnr v r E
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l c po miuga r e y hS n 8 io r c e n otot nP n e1 r ie1 r 5 r o tciinm n u 1 nyrU n e ri n e r o jEs e tm. r u mdf lo m n u e fo pb la t a ig w onCaI, gom1 ni o o n ehi t ua r e tog r u ct oee ulp i n r nt,a r up is nf l l e t r a ts s ts . s n d puh n ms mil n r at eCTrlwms e mw i igh y t
,id i f ht r if seoes
,wnhoi e ,y pi k r e nig t d o u a mce tr r yr o unP r
r o v e wlo .nl ol o dih a r ioh thw e is m inhe 1 o sgis t i h a a rn a i te e ot n leh, s nlalose ot 1,n 9 u af r ef o ca ta.C a f a i s r g pi n t y n u pP i ewp n ,r ma e f t a ml le e a
.isi s mes yl orie c nI , n ,
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s, psw m.t o c fa r k e r1 J ny ab s s o a s i e nng f w e kv "ee gma p s yy n ma n Ci c n a Nmh egt r e no oL nki r a n l tn r otI oa t nu e r e gto3 g a n ai A n n y a toa d ev an Ka an DoWe o e n r y i ge l
. apa n r
pmf ! y eh wt d rnrwin n r S i. h p t ol .b
. ody n ie a s 1 ta 1. .
u ooip rm p r I wl icl et Fm s r5 a e o I n0 J nh 1 Nr w p I s mv mm F m re al mo o s
.tet r orae Winnr k a ec m PC m.polorSd itmre i r na1 l a n t eu m e wm tis a ada n hti w nh t f k 0a ni nm e gG r tn hafos n a u wm s r f pn a ,t n y naa c e1 a r s e m s e a y7 e o a l uE o e i sf Sfc iu0 e e h c
nn9 hh e o& lit t i o sd a lot Onb n eh ug Ont mWnl oe s r a e e fe9 ms o inh lane a 8 e t n n aDml J u o t Ioul l ee c 1 t c a n w a a s 1 1 t I ra n s J i r y eh gl 1 yt a r r wht c w gf J ec c n n u mig ns u g e foy s a n t t m wn Gi i e npmu r oi a n a r v u n ns pa m t m, s Dt w n. p; t a iwu s mh a p t a oh a m 8 ot 1 t I la int a o is ntoEI t r ap w s ji it _s ,
.." p e l'IllNCIPAl. AND SFl.I.ING SilAltEllOI.1)l(ItS compny, it any, of nmqweitum inun kl.wn, 1% Inn ain) 1.ingafe lter, the Pennpany 4 n m.t
'II e futioning tat le was fmth infornution as of July 31, luso, reganhng die eiwnced.ip of b hrve it at its nmqwtitive in.uti.m m el.c innt.ntry is deponlent agam el.c as adainhty e.f or unngw.
Cannnam Stark I.y alw Scito.g Sharclinklers, cah other perum Lt.myn to dn. C..nqueiy to own imme tien n in.p any imtisi tual ni unall gump .4 imhvninals. See 'Husinns-Intnuatu ul Opnatnins amt flun Gye ponent of ele G.unn.m Sim L. and all stucctms an.1 ufficers of the C..nquny as a gninp. 'Hmnw%- G"'1*1' tam." kin m I% Inn amt 1.6pgafelter will ohn luve etw opthni t.. guin tiaw all The nde:nuthai unitaincil hercin lus been oht.med innis el.i: Guiisuisy's rin.r.ls or funn infor. insm a Y jdt'n1 mum 1.y b (hpany mi bN hm M N hm M kN n b an MMnd
.pr at 'lle snatzm Imnishnt ilnntly by the innhviihut to the Omquny. Pursuant to Cahinini.i law, peiunul nsaal ta llw .ish snercialer vahw InwnJ See Note 3 in Gan.Jidatal l'inamial he protwity twkl in alw name of a nunwd person may I.e annnnumty gnoiwity whi< h cid cr sp mse Svilmg Shairla.l.len luse agirnt in guy all of etw enwmn af this olinmg, lunwsws (le gunwrr ami alahty to annen.1 amt nuiuge in its nitirrty.
St.=eiin s N.ed gylcs,cigggegION Ol' COkikfCN STOCK h* *I G*aaaaa Stak Afice si.e iura g,, Perreme nt St. res se ne p,.n e t e f 'the Gquny is anthneiml to inew 7,5mpus shares of Onnnum Stml. IMh st.artholilce is N=?" "-8.uada s 943md N t.es O he si g ,,m. f or em dia ed Cunnmin SM lwld een aH nuttras to bi udnl on 1.y dum slwnnan Nasma.L(l1 Timun s J.1%)ms(2)(3) 500.357 462,211 16 12'.*b 14 99 383.750 5t%357 7M,161 16 12"'
%I I" " ' ""Y I '"' " " ' " ' ' " ' ' '"" """" "E " * " " " # "
bdm W. I.ingafelter(2)(4) .go2.914 13 07 324.750 74.Ist [41 8d d "" 8'*' P'" '"d"' '" M* "'d Id". "' $I"nledder can nunulate udn indcw tlee nauws d juhn It I.ingahlter(5) 19,125 0 62 12.500 6 625 0 21 tlw ta*Inld'e "r **"Inlatn for wlm h sna h votr> are to tw sast leave turn plient in meninatkm Hmuli l. Naymarkl61 2 fig,871 8 67 - 2(ia,'.s71 i as7 p,9,r to the votmg ami a slualmkles lus given notte of tlw slutelwekler's inicuthan tu (nmnlate All Ibeston asul OfActs as a Camip die slun t . Mis votn at tle shairhold.n* meeting amt prkw to the udmg. If any shawlmider _ [IllirS** ) 1.63M,353 53.11 'll2,500 325,h53 30 03 . has given unh imtur, all shairlmklers enay enmniate afwir voies for ramtidates in smaninatu.n. (I) Imimin 5n2.201 shares (16 29%) twkl in trust of whish Sheiman Naymail, his uni Honald I. In smh instame carh slurthnk!cr nuy give one camtklate a muulwr of votn opul en tiw munber Naynuit, hn el.mghter jairt N Stone and Julci Peasinun, a duntur of t!.e Gungunv, are tru,tces ' of stun tars to le clutnl. multiplini by tir muulwr of shancs twid by el.c slowhnhler, sw .6tnlmte ami Shnnun Naymail aml his f.nmly are ele henrAiasics. sm h unmher of votes anunn; as nuny ra.ulut.ites as the stiawlmkler d.all we Gr. Slowtud.h n have in (2) Willumt givmg effect to the gwnsible sale of up to a.i ad.htimul 36,250 sharcs pursuant to the guccmptive nghis ur utlwr sights to uilaude for aihheinnal sluws. All mihtamtmg sh.nn of Gunnum t'micrwntas* uws-allutnwnt option. l Stmk arc fidly paid amt are not subg rt in imeler call os aswnment tsy alw Gunguny. "Ilec aw im (3) D ws =.t im-lude 7,500 shares (.24%) heht of renard by Itase ktarie Pashm, wife of i omversi m sights, n dempthm siglits or sie. Ling imali nnvisium with rnare t tu stuen of Gunnum him L. Tlamus j Pashus. (1) Imindn 26A25 sharcs twld by John W. I.ingafetter as custo.han for a mhuir um. II"I'I'd U"""""
- L "'" ""' d I"I '" '"d" ** * "" "'""Y'" "' ""Y""
U"d"I ' """"'""'"'I"* '"E""Y"*'W ' " " " ' ' " " "3 ""' I" ." "' ""I""" (5) juhn it.1.ingaletter is tlw son of jnhn W. I.ingafeller. kir. Juhn It I.ingafelter is not in any thstritmti.m of the awrts of the Gnutuny alter the guynwns m f ull ol all e wdd.us anmiarnI with shc Canpany, of the Guntuny. I#ntme guynwnts of divalemis wdl ir at t!.c diwretum of alw thunt of Ibertms (6) Imtmh s 9915 duin (.329 ) hehl by kir. Nymark umt his wife as enntccs ur as custmlian fur tl.cir mbaw sun, 22590 dures (7Ar".) Iwh! in a revnrable innt of which Afr. Naymaik, his ""d win ir sletwmlent nimu dw Gungunis undngs Sumusal unu%.n and Mwr fa tmt W father Slwinun Naymail aml Julo Pe.ulman an Inntres aml be aml his wife are hnwkimin U""1""(s aluhty to pay dividemis may be linutal by testam humial nnnuut m ih bank I.un Ahn im hnin 31,9Vi dures (I oy; ) laid by Af r. NaymmL diwetly. Ihrs amt intimle 8M9 dures agen nwnt. See Note 2 to Ganoh.latnl l'inamial Statenwnts (.2in ) Iwkl of reo.ed by Janice I Naymark, wife of it.nutd I. Naynu L th Gm,pany imnishn ih sluirl=hten wdh annual wi=nts emitaining amidnt fin.na sal state-monts ami, for tiw fint thice quaiters of e ac h ye,n, ein.ntoly wp.nt, e m. taming mumlet..I inu uial
'lhe 'w!!ing $1urchoklers are '!!=unas J.1% fun, Jul.n W.1.ingafeltre and John IL I.ingafciter. inloinutism.
kir. I%h n amt kir. Jnhn W. I.ingafrlter are two of tlw thrn hannh n ni etw Onnpany aml have wrvnt as ufh.cn amt <brestnrs unre its im miurathm G ntmeens npens the untnsful unnplethm of
" I." "' ^E""*' ""E ' ' ' ' " ' " """*" * " "'" " ' ^ " ~ ' '
the ollering hereunder, kicurs.1%1wa aml 1.ingalotter wdl usign from dw Gunpany's thuid of ihrnems at tl.c swst nuttmg of the lhunl. Hecauw the Gunpany gnewntly has mi plans to I,Il sush vas.am en, tlw sue of tim linani of then enrs will le intuint inun right to sin at that tinw. kleurs. 1% Inn aval 1.mgafelter wdl. Inwever, omtinue to were in their pinent capacitics through the omi of II.c onrent calemlar year. at which tin e du y wdl rnign as olliren and emplnyres. Tlw G.mpany n unalde to prednt the afin t of tlwir rrugnatums mi ilm onulms ut it luninen. See
'llmimeint nutunul Ogwratunn' I?nr thrn yean nunn.rnemg jannaey 1,19MI kles rs.1%lms aml I.ingafriter will renuin available as unnuttants to tie Gunpany aml will ca h he pahl an ammal fcc sJ $42.2in Tlww agorna nh win m.: rntii.e the abihty of kinus. I% Ins and I.ingafelter in omqn te with Ilw G.nquny. Altlumgh the Ganguny n alue unable to perdk t slw clin t am tl.c 22 +1
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i o'
- 9 QUADitEX COH1'OHATION AND SUBS 114 ALLIES QUADitEX Coltt'OHATION AND SUBSIDIAltlFS '
CONSOLIDATED HAI.ANCE $11EIT _ . CONSOI.ll>ATED STAIEMENT 08' Sil ARElH)l.'DEILS* EQltilY ! (Ibilars in slanesamis) (lbilars in llannamts)
-ASSFTS r wt . Ae.ined 1-m 3t. J.Je st, '-St.nn A e: s as . 1 e4 Ilme 10 pie p,gi ,ag !!al.imw january 31,1975 . 2 816,lMI $ 8.22M ' $2.522 ' $ :L750 Current Ances: Net imunic hw the yc.ar - - 67G 676 Cash ami cash tuvntnusts . $ 4.059 670 E' i" "'I "ld u *5 *"I""
, Inyninwnes in sunnmm semLs, at aust wl.ith a sentimatn nurket 2 87 $ 3'315 Ed"PI "I'" "' L guntiuse pl.m 0.5 12 ', {l2 '
. 32 -
Anuunts rnrisable, net of warrve of $216 amt 150, resgartively - 6,406 .9 232 N 'd'"'"'7 S'* k "P'" P" Cash""sl'um!nuls., $.12 gwr sh"aec I U I WI 13 ~ TI g m,,,;,, ,. 73 92 (ain) (ni) Engitoyce adrames aml auciuid entwnses ' 237 950 E"I"" thaw of warrants ,_,,,_- (15) -- jl5) Total surecut aucts 11, Halu n January 31,1976 - 2.818.E59 1,274 - 2,Nes 4.1 86
. - 1_32 -.14.:259 Not naimw for the year . --. -. 4'il 431 Property aml Equigmwns, at utst ( Notes I am!5): Escrdse of opthms umkr:
limkling amt ingwusements 2.189 2,189 Employer samL purchaw plan 46 - - - I.ar=1 sul las I inngwnvements 377' 375 Nmniatutory sam L optsm plan 13. tug 57 . - 57 - Vrhiales aml shumtaminathm equigment 571 (G7 Cash thvidents, $ 07 per share .
~
(189) (189) Offur immeure amt cepugment 1.300 1,475 , Dalance January 31,1977 ' 2.
~ 52,9il 1.cascim!.I enquovenumts 123 123 ll tis 33 5 4.4'15 Net imun.e f.w the year - -
1.0 17 1.0 87 Cemstemtum in progrns - 328 Eincie .f options un.len 4.5t18 5,129 Employee sim L genrotuw pl.m I,if t I - 4' l.cu airmuulateil depicciatism aml anuutization ~p2) 3N2 *g)(1,105 Nmutatutory semk opthm plan Cash ihvulcruls, $ 09 per sharc llatame January 31,1978 '
' 2.H75,119 20.757 -
1,3'N 59
- (2pi)
- 59 (213)
Cah S.urem!cr Yah.c of 1.ile lmurance 1%Iicles (Note 3) 7TI 4*M
- l.959 - 5.:15 7 Net innmw for the year - - 1,5N1 1,5Mi Cmt in Escris of Net Awets Aninirn! (Note 7) 752 ----732 Escrdw of optiims umler:
Total anets $15.9tG ~ $19.415 Employce slut k inuthase plan . 1.8 85 . -l - I
*** ~ ~~
Nunstatutory stm k optism plan 19,404 5'l - '51
' Cash alividerals, $.11 per slaase. - -
(361 '(3M) 1.lAlltl.ITIES AND SIIAltEMOI. dells' EQLitTY liepurcluse of sh.ncs inun sbarcimkler's neate pur. Current liabihtics: 4' '"d"' '" S'" I '"I""P' i"" dE'"*""" !37 N t -
~
. IINI . - II22I Notes guyal.le (Note 2) $ 124 $ 3(xl . I' Ilddme Jamury 31,1979 . 2,N58.372 l.455 5.lin 6.568 Current gurriem of hmg term alcid 72 ' 77 Net imune for alw year . -- -
2.211 2.218. Ansames payable 652 1717 Shares 6unni for acquisiti<m of lis alth I'leysics Actrmst umqwenati.m amt ottwr cigwnses 981 1,412 Systnm, Inc. 111,912 759 - 759 Aurunt imimie laws (Gl 1,401 "I "Idi""5 "*IC" E,8""'I'*'YC# Delerrnt immume tain 2,918 E*P S'"' l ""* I hd'r P Id" I~lIUI *I ~ 3I'
-- -. 2916--- N nntatuinry semL optism plan 3.1.87 8 92 - . 92 Total onrent lial.shtics 5.379 7,l'n I : Cash divi.h mis, $35 pro si ne. - -
8122) 8-122) temg term Del.t (Note 2)
, ,l.27'l ,,1,229 3,g,m.e J.mnary31,1980 - 3.0445l 2.1H talid 9.2 19 Cannmituwnts ( Nutes 3 aml 5) Nrt innmr hw tlw gwrial - - l All B. Sit -
Shan inklers' Eeputy (Notn 3,4 aml 6): "Ilope "Id "'sem '""IC"
- E"".m"p*
I- L"'tmn haw plan 7.Il l 19 - 19 Commum stml, antimrifcil 7,5m.mo shavn, emist.nnling 3,tn9,453 slures ' mig 92 101 - 101
.Amt 3.b. sil.4rrs, resgWt tlWe'ly, stJte el at 2AM 2.501 (. ch Nomf atutmy divid.d amlp quablini
$ 10 r shart. st.nl uptism pl.nn - - . - -
13dril ' 13PI) Itetamnl carumgs 0,910 8,432 Tn I.nwlit of mmstatutory stork ngdions notised -
,HH - 100 Total shareholders' capiity 0.2 19 10,!yn Hal.uire july 31,19SO (unamhted) 3 0T125al $2.568 ' $3.112 $103Pil Total halahties ami sturehnhlers' equity $15.fMG $19ctl5 The acnnngunying entes are an intrgral part of this balamr sterce. # "#"""Pd"YI "E "' d "' "" '" "'"E' l'" ' """"
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; .y
-=
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=. 2 - = x;-
v - - E: ;s
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= 2 .x .=
z 4 = := ;t.:, ,x .
=
p :? jq -
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Pm ..=-
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-E
..a =-, :=-
b *d e "T [a. .Eea . r 3 . we.3 e-2
; w,
- M*
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2
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- y s r .=.. . ;
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- , L .
,b xx .z= -* = 1 ..b: -
P :5
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e s,J 4 -
.z =.s ss..p 7 . u = 2. .=,
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.a ~z ~= -3 .s -:
d y: , 3 = = z= : 4 x.
. a in. x ..
=
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=
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~=~= r I.,
z
- - 25
=-
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f
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e4
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.
- 2g = . ,*~== .c,, , - .
3 = =. -* 6 :.a P 8 =
= x ,= = =. s = e - 3 =
?.
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- =
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- T . z 3. ** = ? , 5 ~5
. 1
.- ==.- s N
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-~ -r 2. z +
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e 1 - ,,
.-- =
? =- 6
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=
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- n. * , , , . .. ~=x z
* ; f -
3 *
= 2
. = 5 ! ;. : -
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.2
-. *d .:<'
2
== w
===>2 cs G
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? r x = r 9 st;"M
- m w
n-
- a
' :5
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; t
- 5 e d g QiZ= - " - c t c-
- t t - e+ m
-m w
$: = .g a g ~ .7 ix 2, -,,* M ..* g:-==. - k- x= 7! g == .=: C . *q- i % ,
;m: - , -
= 5 lj 7-cz-
- , e., .
,a.=. 2*'u s=I
-k r- .*
.= -8 r
=.=.,=-
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* =s - =- 4 s * "
?
- = 2 = ~,Fa.a y =
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ai- ?, m ; - -e -u = = , ""w =: z
*F'.
=. -2s "". a;, =
4
..=.,,g ,
=
-- E
=g g- j .z s# : .: x -
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,z ,
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= ,,y .:
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-= ,3.
3 , ,,
- --- u5 7 =h
- g ,=..q38 Q2 -7 s s = e z g .2 -= z ., ;_k- -- =5 2 .
P- L r s .= y y ==* *= ll -le . = -.
*- s*- -,<a "; =
- r- se
- = rrr .= ;, * -
- r i = rf5 f.
* .,.**r=
L = *: g~ a
- .r 4s s- ==l" .
,s - *
'A 2 = z 2
5 == - =-. s- :, =. L i*p t '., .?. z. 2. - . > .,=.=. w = - e
- e. .s
#- E r, " :
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- e , f- t 4 3 i>J=0-# -i 's y 3 e . c- : ? s<
, = >. .- F x= .= *. . c 3 T r* z 3 uu-g -3
, == -m=5u- **",,,z . =
-==.C e.--s xe Z . a* Tk,z3 = T. =r .L. . =- .
r e
- 5. -,- .=
=.
m- = r2-- ,. .=;. - ; a
.- = .g . :
.- g ,e ,
, : ,a 1 :- =. - . - = a# v s .,, .--z- ..
sk z - ,2 1 .h -. =,
. > - sc.s x u, , - .
r .*
.xg, .,=.z
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# =z .Cx _
a-s .. .9 . g M -=r '.1.
=.=:= . z=-
7 r
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a T. g
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.3 I
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a hE .
# *
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- am _ ~ o ~ ' ' , ,. . q
' NO'IES 'lO CON %OI.llMIED FINANCIAI, ST41EhlENTS--(Gmtime.I) 8 Ntyl1510 CONSOI.lDATED FINANCISt. STATlalEP(IS-(Gmelinucel) etems entering inta slic sh treuunati.no of <leferecil tases at J.muary 31, luMI, wliisti are init i.ninit.sl 10. Supplementary Inrenne Statement Ininematines su ller almve Ial lc. bi. kl.awks I:mited T1.c las guenhient elilless frenes time anunmt solAainwal lay applying ti.e Frileral statnt..sy tininne fiat 31 .
tas rate to imimw twinre lases as fol'nws: e . y p ,3,a y ., a s, . e is r.aa,.asj s,s st.,,ni,, F a.,e _1918 _1977 g g7. -s .eu73 in%e . 1973 -
- -- 1940--
1.de 31, J.) _ , v. tj=ted ) 31 .(Ihittas an el j t'n==lde el Taars, utlwr titan inonne tancs:
!s78 !s77 1914 1 *F5 !ssa 1979 !nno g.,y,,,33 $2t. $258 $120 $%9 l'ifiO $28P6 ' $ 385 liaikaaa==ld 88 59 *2 Fntreal t.as 3minhune at statutosy oit,., 57 81 -13 21 rate $681 $ l'il $1.(fil $Mll $2.tr20 4706 ' $1.705 St.ite eineimic laws, art sif Fntreal leswfit 72 51 105 Kl 216 79 192 Investnu i.t tas a rnlits (30) (5) (21) (61) (87) (23) (H)
Oil.cr . 47. . . 25 23
.IS. . 37 _. 2_1 . 7. .
$770 $555 31.130 $8!r2 . $2.210 $885 $ 1.8')6
- 3. Quarteily I inancial Information (Ifnausliteil)
. _ _ . . . T '5"*3*d !"""*" 3.h 8 83 . . _
Fint Scrand Bird Fount. 9"*.d'.' 9"*'?" 9"*d. 9'"d'.'. lise II.ees. ands, e= cept per sl ore amenents } Not ervrmws $:1.215 $1.379 $1/192 $?l.3'Il Gats aint cywnws _2.978 2 9_17 . 2 N. il.
._2._N7_0_
In<iane Inline las gunwhlins aent citramelinary a rutit 375 401 4 15 112 1%nhhni Inr inuanc laws _ I95 2:0 , ,117 251, linanne I.cf we estruisilmary sentit l'io 192 218 281' Estemmimary a seilit 7tu - -- - Net imime $ M89 $ 192 $ 213 $ 281 Nrt unimw gut stiare: lirleur estrmuslm.ary crnlte $ f Wi $ 07 $ 07 '$(M Estrandm sy crnlit .28 --- - --- 3:p S tr7 $ n7 $ts ve., F= led f n y 3t, Isno Fi..a sn J %ird F nile Qu. nee Qi e+er Qeartes Quartce Not ervenues Gnts anil rsprnws
$3.827 3 tys7
. $1.839
- 3.9 82
$6. 817 4tnl
$7.975 6.fi'El l'!
I Imunw twl.ne tas gunwhi.m 7 10 9 87 5 I21 1,322 l 1%nhi.m int iminne laws 378 . 4tn 708 6 fit { Nitimnmc $ 28 . $ 473 4 720 $ tini .
- Not itu ome pra stiaec $ 1:1 $.16 .$28 $ 22 38 39
, m.. . . ,
No deefer, seie.m.n er any other pee.en it.e been e.therlaed to give any Infeemetten er to me.he .n, rep.
- re.ent.tten ten connecteen with thi. onering other th.a the.e cent.ined be thi. Pro.peche .nd E given et m.d ..ch we,m.iie . e, ,e,,e.eni.iwa. .n.. e m.
u.d ,en ..ing me.n same,ued e, ih. Cem,.n, 725,000 Shares .- er by any of the Underwriter.. Thl. Pro.pect dee. not .!- co.ut.no .a eum ie .e. e, . .euen.non - one,
.e .n, e sec e. .n, st.ie e .n, ,m.en isw - i. w dis.n.he. en.,. .encn. n ylladreX.
. i en n .-h . . e. v e den.e., e u. P,e.,ec . ..
.n, u,,,e dee. nei i.n,1, e e,m.nen cenioned e i.e.ew i. ce,,ea .. ei -, *,.. .on.eg.eni ie n. de..
.COrpOraIlOn Commari Sinck T ABLE OF CO.fTENTS
~go P.
Av.ef.ble Information 2 PROSPECTUS Prospectus Summ.ry 3 The Covrip.ny 4 Price it.nge of Common Stock . 4 Oswidends 4 Capit.hs. tion . . Con.ohd.ted St.tement of Income 6 M.n.gement'. Discus.len .nd Analy.as of the Conso&ted St.tement of Income . 8 Qpgggl l%pglg3gg lJg)l)gd Busmes, it M.n. gem.nt ' to Pemcip.! .nd Sell 8ng Sh reholder. 22 Descripten of Common Stock 23 ww' ding 24 Se temfer IH, tunn t og.8 Oprian. 26 E =Perts 26 Ileport of Independent Pubhc Account.nt. 27
- QtlADREX CORPORATION 1700 Dell Avenue. Campbell. Cahfornia 95008
. NOTICE OF ANNilAL MEETING OF SilAREllOLDERS
. June 10.1980 TO Tile SI' AREllOLDERS:
NOTICE IS IIERE!!Y GIVEN that the Annual Meeting of the Share-holders of Qt1ADRiiX CORPORATION. a Cahfornia corporation. ("Com-pany")'wdl be held at 1700 Dell Avenue. Campbell. Cahfornia. on Tuesday. June 10.1980 at 2:00 P.M. for the followmg purposes, all as described in the accompanymg Proxy Statement:
- (1) To c!cca a lloard of Directors of eight members for the ensuing year; (2) To consider and act upon the ratification of the selection of the firm of Arthur Andersen & Co. as independent public accountants for the Company for the fiscal year ending January 31.1931:
( 1) To consider and vote upon a proposal to approve the amendment of the Company's Employee Stock Purchase Plan. as more fully set forth in the accompanymi; Proxy Statement, heretofore adopted and approved by the lloard of Dstectors of the Company subject to Shareholder approval: (4) To consider and vote upon a proposal to approve the amendments of the Company's Nonstatutory Stock Option Plan, as more fully set forth in the accompanying: Proxy Statement. heretofore adopted anti ap-proved by the lloard of Directors of the Company subject to Share-holder approval; (5) To transact such other business as may properly come before the meet-ing. Shareholders of record as of the close of business on April 15.1980 are entitled to vote and take part in the husmess of the meeting. All shareholders are urged to participate either by sending in their proxies or by attending the meeting in person. Ily Onder of the lleard of Directors. JOSEPil F. CliRNY Secietary M ay 1.1980 AI.I. Sil AREllOLDl!RS ENTITI. lid TO VOTE AT Tilli MEETING ARii REQllESTED TO SIGN AND DATE Tilli liNCLOSliD PROXY AND RETtIRN IT PROMPTI Y TO OtIADRl!X CORPORATION A RETilRN liN VI!I.OPli. WillCII Rl!QtilRES NO POSTAGE IF Mall.ED IN Tilli llNITED STATES. IS I!NCl.OSED FOR Tills PilRPOSi!. I
m ._ _ _ _ _ .
' QLIADREN CORPORATION 1700 De!! Avenue
. Carnpbell. Cahfornia 95008 PROXY STATliMl!NT Annual Meefing of Sharehoklers June 10.1980 This Proxy Statement is furnished in connection with the soliciatum of proxies for use at the Annual. Meeting of Shareholders of QUADREX CORPORATION, a California corporation. (" Company") to be held at 1700 Dell Avenue. Campbell. Cahfornia, on Tuesday. June 10. 1980.~at 2:00 P.M.. Pacific Daylight Savings Time.
The enclosed proxy is being solicircil by the issuer: i e. the Company's lh>ard of Directors. The espenses of sohcitation of the proxies will lie Imrne by the
. Company. The solicitation wdl be made primarily by mail. Der (tors,of ficers and regular employces of the Company may solicit proxies by telephone, telegram.or in person. Arrangements may aho be maile with brokerage houses, banks. an 1 other custodians. nominees and fiduciaries to forward solicitation materials to beneficial owners for whom they hold stock, and the Company may reimburse them for reasonable out-of-pocket expenses incurred by them in doing so.
. Where the sharehokler specilies a choice as 'provided in th'e form of proxy.
with respect to any matter to be acted upon the shares wdl be voted in accord-ance with the choice so specified. otherwise it will be voted in accordance with the reconnnendations of the Company's lhural of Dires tors. This proxy is revocable at any time before it is voteel. A sharehohler may sevole his prosy by sending written notice or a subsequently executed prosy to the Secietary of the Company. The givina of a prosy wdl not allect the righ,t of a shar.:hohler to attenil and vote in person at the inceting. VOTING SECLIRITIES The Company has only one slass of voting secun:ics outstanding to wit: its common stod (" Common Stock"). Only shareholders of record as of the alor.c of Imsiness on April 15.1980 are entitled to notice of anil to vote at the meeting. As of Apri! 15.1980, there weie outstanding 5.077.951 shares of Connnon Stod. ' i I l
, +
7 a Y VOTES REQtIIRED FOR ELECTION OF. DIRECTORS: Numberof Shares - Percentage of
. AND APPROVAL OF PROPOSALS , Nameand Address Nned Beneficially -
Common Stocki Each sharehohler is entitled to one vote'in person or by proiy for each share -Shernian Naymark' :733,7578 -
- .. hehl Under Cahfornia law and the Company's flytaws, a majority of the shares - 23.8%! "
c/o Quadrex Corporation " of Common Stock entitled to vote, repre.sented at a meeting in person or by 1700 Dell Avenue
- prosy, generally constitute a spiorum, and if a ciuoruniis present the af firmative - Campbell. CA 95008 e : vote of the major;ty of the shares represented at the meeting and entit!ctl to ' *
-162.211' 15.0*
Thomas J. Pashos' }' vote on any matter shall be the act of the shareholders. Accordingly, each pro- e/o Quadrex Corporation : 1-
; posal requires the vote of a majority of the shares present at a meeting at which 1700 Dell Avenue .
a quorum is present. Campbell. CA 95008
- The California Corporations Code permits cuniutative soting for directors. Joh'n W. Lingafelter' ', 102.915' .13.l ? -
{ - tinder cumulative voting rules, every shareholder who is entitled to vote at any
- cIcction of directors niay cumulate votes and gwe one candidate a number of
) }"[*[P '" "
Campbell. CA 95008
-. votes equal to the number of directors to be elected multiplied by the number of ~
i votes to which the shareholder's shares are entitled, or (listohnte the share. _ Ronald L. Naymarka 770.5725 25.0' holder's 'votes on the same principle among as.many 'cantlidates as the share. c/ Quadrex Corporation holder thinks fit; No shareholder. however. is entitled to cumulate votes as to a l '""
- ph*j,h"A95008 candidate or candidates unless the name(s) of such candi< late or candidates
! have been placed in nomination prior to the voting and'the shareholder has Jules Pearlman' - . 729.60l* 23.7* of the sharehohler's intention to , c/o Pearlman O Bose given notice cumulate at the meeting the sharehohler's votes; !!prior to the voting' shareholder has given any one such notice Suite 1000.The Towers all shareholders may cumulate their vorcs for candidates in nomination. Discre- Campbell. CA 95008 I tionary authority' to cumulate votes is solicited to the limited extent . herein -- George J. Lyon' 3.840' O.I' i descnbed. In the event a shareholder gives notice at the meeting of his intention c/o Quadrex Corporation
- to cumulate votesc shares represented by proxis subnutted pursuant to thi, 1700 Dell Avenue.
Proxy Statement, which favor the nominees supported by the Company. will be Cainpbell. CA 95008 . .. ! voted equally for each of such nominees other than those with respect to which . Wdliam R. Moffat' NONE O
-the sharehohler specifically withhohls voting authorization on the sharehohk r's e/o Quadrex Corporation proxy. Any shareholder desiring to cumtdate votes in any other manner must be 3 L,700 DcIlCA Avenue
' present at the meeting. If no sharehokler gives notice of intention to cumulaf ampbell. 95008.
! tively vote the shareholder's shares, the election of the directors shall not he by IL Lee Karns' 9.750' 0.33 - I cumulative voting and the number of shares represented by each proxy suh.- c/o Quadrex Corporation J. mitted. pursuant to this Proxy Statement, whit h favor nominees supported by 1700 Dell Avenue i the Company, will be voted for each of such. nominees o'her than those witti . Campbell. CA 95008 respect to which the shareholder specifically withhohls voting authorization on Janet N. Stone ' 566.798' 'I8.4* ! the shareholder's proxy. c/ Quadrex Corporation . 1700 Dell Avenue l Campbell CA 95008 -
- PRINCIPAL SIIAREIIOLDERS AND SIIAREllOLDINGS OF Directors and Officers I.665,935 51.1
- DIRECTORS AND OFFICERS collectively as a Group.
] (10 persons) a Set forth below are the name and address of each beneficial hohler of mine than 5'l;, of the outstanding Common Stock on April 15.1980, the name amt . Each is a director of the Company Sherman Naymark is also President of - l the Company and Thomas ); Pashos and John W.1.ingafelter are Senior address of each director of the Company, and the number of shares and the percentage of Common Stock heht by each such owner, cash such stirector anti Vice-Presidents. None of the other nominees are officers of el e Company.
= Includes 501.601 shares (16.4%) heki in a trust of which Mr. Naymart, by all directors and olhcers of the Company as a group. . his son Ronahl L. Naymark his daughter Janet N. Stone and Jules Pearlman -
2 3 4 S
, _,,o , _ _ _
_ . . . . . .w .. , ___.i______,
y '
' ~
Irrs trustees,and Mr. Naymark' and others are the benchciaries. Also includes 225.000 shares (7.3%) held in a trust of which Mr. Naymark, his son Ronald L. Nxymark and Jules Pearlman are trustees. and Ronald L Naymark and - his wife are the benchciaries. (See footnote 5 below.) With respect to such
; th:res. Mr. Naymark shares voting an I investment powers with 'the 'other - ' trustres. Mr. Naymark holds sole voting and mvestinent power with respect to the other 1.156 shares.
2 Subicc to community' property laws of' Caldornia.' Mr. Pashos holds solb
. voting and investment power with respect to these shares. The number does not indude 7.500 shares (0.2%) held of record by Rose Marie Pashos. wife . .
of Thomas I. Pashos.
- Includes 26.625 shares (0.86%) held by Mr.1.ingafelter as custodian for a siinor son and w th respect to which he holds, as such custothan, sole voting
.and investment power. Also includes 376.290 shares (12.2%) held by Mr.
1.ingafelter in his name over which he holds sole voting and mvestment power cubject to community property laws of the State of Cahfornia.
- Includes 9.315 shares (0.3%) held by Mr. Naymark and his wife as trustees ;
~ or as a custodian for their minor sons and 225.000 shares (7.3%) held in a revocable trust of which Mr. Naymark, his father Sherman Naymark and .
Jules Pearlman are trustees and he and his wife are benchciaries. Also inclindes 504.601 shares (16.1%) held in a trust of which Mr. Naymark, his father. i Sherman Naymark, his sister Janet N. Stone and jules Pearlman are trustees - and Sherman Naymark and others are benchciaries. (See footnote 2 above.)' - With respect to the shares held in trust Mr. Naymark shares voting and investment power with the other trustees. Also includes 31.656 shares (1.0%)' . with respect to which Mr. Naymark holds sole vc, ting and investment power. Does not include 7.869 shares (0.25%) held of record by Janice I. Naymark wife of Ronald L Naymark.
> Consists of the 501.601 shares and the 225.000 shares hehl in tiie trusts referred to in footnotes (2) and (5) above of which Mr. Pearlman is a trustee and with respect to which he shJres voting 'and investment powers with the other trustees. ' Shares are held directly and shareholder holds sole voting and investment . power. s
- Includes 16.312 shares ( 0.5 3,'. ) held m rust by Mrs. Stone and her husband Peter Stone as trustees for their m,nor sons. Also includes 504.601 shares (16.1%) held in a trust of which Mrs. Stone. her father Sherman Naymark. her brother Ronald I Naymark and Jules Pearlman are trustees and of which Sherman Naymark and others are the beneficiaries. (See foor-note 2 above.) With respect to the shares heIJ in trust. Mrs. Stone shares voting and investment power with the other trustees.< Also includes 12,885 shares (1.4%) with respect to which Mrs. Stone holds sole voting and invest.
ment power and 3.000 shares (0.1%) held by Mrs. Stone and her husband - Peter Stone in joint tenancy wHh respect to wluch Imth joint tenants can exercise sole voting and investment powers. Does not include 7.260 shares , (0.2l%) held of record by Peter Stone, husband of Janet Stone.
-1
- . . 1
-ERRATA SHEET Certain material was inadvertently omitted from the proxy Statement furnished in connection with the solicitation of proxies for use at the June 10, 1980 Annual Meeting of Shareholders of QllADREX CORPORATION.
-The material on page 5. prior to the heading Family Relationships and llusiness Esperience of Nominees, should read as follows: -
Collectnely. Messrs. Sherman Naymark. Thomas - J. Pashos. John W. Lmgaletter and !!onald I.. Naymark. touciber with their associates, own or control approximately 56% of the outstanding shares of Common Stock. The Company has entered into stock purchase agreements with its pain-
- capal shareholders. Thomas J. Pashos und John W. Lingafelter, their wives.
Rose Marie Pashos and llarhara 1.ingafelter, Sherman Naymark and Ronald L Naymark which provide for the purchase of shares upon death. The imple-mentation of any one or more of these agreements could result in a change in
.controlof the issuer. These agreements are discussed in more detail below. (See Certain Transactions page 9).
ELECTION OU DIRECTORS Identification of Nominees At the Annual Meeting. eight directors are to be c!cceed to hold office for the following year or until their successors shall be elected and quahfy. The A per.xms designated as proxies in the accompanying form of proxy have advised the Company that, d no contrary instructsons are indscated, at is their intention to vote the proxies for the election of the nominees who, together with an identihcation of other positions and ofhces held with the Company and their age and period of service as a director are set forth below. Ahhough the Company does not contemplate that any of the nominees will be unavailable for any reason, in the event that a vacancy unexpectedly occurs, the proues will be voted for an ' alternative candidate to be selected by the person or persons acting as proxies as designated in the form of proxy solicated by the present Board of Directors of the Company. All of the nominees are members of the present floard of Directors. All have previously been elected directors by the Company's shareholders and each has served continuously since his first election or appointment as noted below. As previously indicated, each director c!ccted will serve frora June 10 1980 to the following annual meeting of the Company's shareholders or until their successors shall be elected and qualify. Other Position Period of Service Nominee. . . . _ _ _ _ _ _ _ .lleld With Company Age As Director Sherman Naymark President ,_ _ . _ - . .59. . _ _ _ . _ . _ incorporation to present - Thomas J. Pashos Senior Vice President 6l Incorporation to present John W. I.ingafelter Senior Vice. President 52 Incorporation to present Jules Pearlman None - . . -18 1972 to present Ronahl L. Naymark Employee 31 1973 to present George J. I. Son None ~50 1977 to present Wilham R. Moffat None 50 1978 to present
- 11. I.cc Karns None 50 1978 to present Sherman Naymark. Ronahl I.. Naymark and Jules Peartman are trustees of the trusts referred to in the notes (2) and (5) muler PRINCIPAL. SilARii.
IlOI.DiiRS AND SilARI!llOI. DINGS OF DIRiiCTORS AND OFFICERS g almve. Accordingly, they m.iy be considered to be associates. 5
- c. .
I Collectively. Messrs. Sherman - Naymark. Thomas I. Pas!.os John. W . l 1.ingafelter and Itonahl l Naymaet, together with their assmiates. own or control approximately 56% of the outstanding shares of Common Stock. Although the Company does not contemplate that any of the nominees "' ^ wdl he unavadable for any reason in the event that a vacancy unexpectedly occurs. the proxies will be voted for an alternatne canthdate to be selected by the person or persons at: ting as proxies as designated in the form of proxy . solicited by the present Iloard of Direstors of the Company. All of the nominees are members of the present iloard of Directors. All . - i have previously be n elected durctors by the Company's shareholders and cach has served continuously since his first election or appmntment as noted below. As previously mdicated, each director elected will serve from June 10 i 1980 to the following annual meeting of the Company's shareholders or until i their successors shall he elected and quahiy. Other Position Period of Service Nominee .lleid With Company Age ' As Director - , i Sherman Naymark President 59 Incorporation to present Thomas J. Pashos Senior Vice. President - 61 incorporation to present John W. Lingafelter Senior Vice. President 52 Incorporation to present lules Pearlman None 18 1972 to present
. Ronald L Naymark Employee '31 1973 to present George J. I. yon None 50 1977 to present Wdham R. Moffat None 50 1978 to present
- 11. l.ce Karns None 50 1978 to present l
Sherman Naymark. Ronald I Naymark and ju!cs Pearlman are trustees of the trusts referred to in the notes (2) and (5) under PRINCIPAI. SilARE-IlOI.DERS AND SilAREllOI. DINGS OP DIRECTORS AND OFFICERS above. Accordmgly. they may be considered to be associates. Family Relationships and Business Experience of Nominees - Mr. Sherman Naymark and Mr. Ronald L Naymark are father a nd son. There are no other family relationships among the foregoing nomim es. The principal occupations, emr oyment t and business experience of each of the nominees are as follows: Mr. Sherman Naymark is employed by 'he Company. lie is its President - i and has been serving as such since the Company s incorporation in 1969. l lie is an engineer with more than .30 years experiense in the design, construe-tion and operation of nuclear power plants. Mr. Thomas I. Pashos and Mr. John W. I.ingafeiter are also employed by the Company. They have served as olhccrs of the Company since its incor-I poration in 1969 and are both currently Senior Vice-Presidents. Mr. Pashos j is responsible for the Company's technical efforts and has more than 25 years 5 , 1
f
.'of e'nginerring experience in the nuclear industry. Mr. I.ingafelter is responJ ' '
' Remuneration of Directors and Officers sible for the. Comp.iny's international efforts .ind has been involved en the '
Auclear business all ot his professional career. .U'e following tabulate..m shows the ~ aggregate current semuneratum p.u.d ;
. Mr. lutes Pearlman is an ~ attorney at law and 'a member of the. hrm of during the fiscal year ended January 31.1980 to (i) each of the five highest , Pearlman 6 llose, Peariman 6 Ilose have served as counsel to the corporation ~ - paid olhcers or ducctors (or Imth) of the Company whose' aggregate remuncre sixcc its incorporation. Mr, Pearlman has been a practicmg attorney in Cahfor- 1ation exceeded $50.000; and (ii) all directors and officers as a group.
nia since 1%I. Cash and' Cash Equivalent . Mr. Ronald Naymark has been employed by the Company since 1970 - Porms of Remuneration L liiis in charge of the projects operation organizational unit of the Company ' ~' fSecurities~ and is responsible for all maior projects of the Company. g, pac;,,,, Mr. George Lyon is a ' principal in the investment firm of Moore. Juran in Which Property' _ Aggregate L Salaries.' and 6 Company, ine, of Mmneapohs, Mmnesota. Ihs activities inchide corporate Name of Remuneration Pecs and Personal Contingent . finance. investment banking. acquisition analysis and stock brokerage and he Individual . Received L ilonuses llenehts Remuneration t has licen active in these areas.for many years. Ile is a thrector of General Growth Properties and Comprehensive Lare Corporation.' companies. with - Sherman Naymark' securities registered pursuant to Section 12 of the Securities hxchange Act. President $138.792 $5.650.758 $ 488.97(*) -
'Dr. Wdliam R. Moffat is Thomas J. Pashos: Senior Vice 90.931 ~ . 5.731.42= - 280.97(*) .
ment of. Natomas Company, San presently Francisco.Vice-President forthe Cahfornia. Durmg Corpora'te last hve Develop . Presalent . ars he also served as a lecturer m'econonucs at the Graduate &hool of John.W. Lingafelter n Senior Vice 94.305 (382.83)(3) 722.35(*)
. flusiness. Stanford tiniversity and prior to that as an economist for the LI.S. President Government. Natomas Company is a diversihed energy and transportation R here ll. Dempsey Senior Vice 78.923 None None :
company involved principally in petroleum e sploration. development and President , production, geothermal energy exploration and production, coal mining. inter. Greenheid A.Randall.Jr. Vice President 57.169 None None national transportation. . real estate and . crude od and petroleum product All Olhcers and ----- marketing. 601.860 10.155I22(') 1.2192.29 Directors As a Group Mr 'll. Lee Karns is the President and a director of Comprehensive Care (11 persons) Corporation. a company specializing in the management of health care facdities. lie has been President since 1972. Comprehensive Care has securities reg.
. istered pursuant to Section 12 of the Securities Eschange Act.
'The : Company makes automobiles.available to its officers and pays the operating and mamtenance costs of such vehicles. The vehicles are used for business purposes. however, they are avadable, and occasiemally used for per- -
Cimmitties sonal use. No records are kept by the Company alhicating these expenses. su The L,ompany does not have either an audit or a nominatmg committee. that no definitive value can be placed on the personal use of such autoundules
,The Company does have a Compensation Committee comprised of directors. by any of the persons listed. Operation and maintenance of these automobdes Pearlman. Pashos. Moffat and Karns. and an incentive Compensation Com- . cost the Company. in the a99regate. $1.712 durime its fiscal year ended Janna,y 33, i930, mutee composed of directors Lingafelter. Moffat, R. L. Naymark and Pashos ami two employees D. A. Goldstein and G. A. Randall. The function of the = The amount set forth consists of the amount expensed for financial purposes Compensation Committee is to review the remuneration protms.ds of the (i.e. the difference between the premiums paid and the increase in cash President wnh respect to all management personnel reporting to the President surremier values) by the Company during the fiscal year ended January 31 and to recommend to the full board all remuneration arrangments for such 1980 for the hfe insurance policies maintained by the Company pursuant to
.' personnel and for the President of the Company. The Gunmittee met 6 times
~ the stock' purchase agreement referred to below between the Company and during the hscal year ended January' 31.1980. The functi<m of the Incentive the. cmployee and his wife. (See Certain Transactions paue 10 below.I Compensation Committee is to develop amt recommemt to the full board compensation plans for employees at all levels which provide , incentives for
- tinder an agreement between the Company and Mr. Naymaik, in the event increased prr>iluctivity and award for past performance. This Comm tree met w d benehciary or his estate wdl be 3 tunes durmg the hstal year ended January 11.1980" of Mr. to entitled. Naymd's a d. Imof4$8.s@'830 per year for a perioil receive payments of ten y ars e .
During the fiscal year ended January 31.19h0. the Company's lloard of ~ Tk ammt se foMi n prma the ' mount a espensed by the Gunpany for Directors met 7 times. hnancial purposes during the fiscal year entled January .31.1980 for the insurance pohey acquired by it to fund this obligation, it is the net diffeience 6 7.
.t
e ~ hetween the prenuum p.ud by the Ccmpany for such pohcy and the increase All Directors '
. in the policy's cash surrender value during the year. and OIhcces-
.llohert 11. a grou ,-
'Under an agreement between the Company and Mr. Pashos. in the event of g ),,pse y gio p,,3o ,,)
c Mr. Pashos' death. his designated beneiniary or his estate wdl be entitled - to receive payments of $1.740 per year for a period of ten years. The amount : Options granted (13179 to 415 80) set forth represents the premiums paid by the Company during the fiscal year . Number of Shares 4.662 7.377 ended January 31. 1980 for the insurance pohcy acquired by it to fund this Average option price per share of options granted (1-3179 to 4-15 80) $0.1313 50.13}}
' obligation. It is the net difference between the premium pani by the Company Aggregate market pnce on date of grant $28.126 $46.179
- for such pohey and the mcrease in the pohey's cash surender value dming Options exercised: (I.31 79 to 4-15.80)
' h
- Y'* Number of shares 5.101 ~ 8.601
- llnder an agreement between the Company and Mr. I.ingafelter. in the event Aggregate option price of shares pun hased $680 $1.147 of Mr. Lingafelter's death, his designated beneficiary or his estate wdl be Aggregate market value of shares on date entitled to receive payments of $2.840 per year for a period of ten years. options were exercised $ 3 3.428 $51.577 The amount set forth represents the prmmms paid by th Company during unexercised options held at 415 80; its fiscal year ended January 31.1980 for the msurance pohcy acquired by Number of Shares - 4.765 8.251
-it to fund this obligation. It is the net chfference between the premium paid Average option price per share (of all unexercised options held at above date) $0.1333 $01333 by the Company for such pohcy and the increase m the pohcy's cash sunender value during the year. .
{ Proposed Ilcmuneration i None of the foregoing officers and directors of the Company are or have All olhcers and directors as a group (11 persons) are expected to receive heen indchied to the Company, compensation totaling $582.000 during the fiscal year ending January 31.1981. During the last quarter of the fisal year which ended January 31.1975 This includes direct reinuneration to Messrs. Sherman Naymark. Thomas J. the (,anupany purchased hie insurance policies on the lives of seven persons. Pashos. John W. I.ingafelter and flohere 11. Dempsey of $115.000. $96.000, e three principal shareholders of the Company. Sherman Naymark. p'homas I J. Pashos. and John W. Lingafelter, their wives. Joseplu. ne Naymark.
$96.000. and 580.000 respectively. Greenhchl A. Ilandall. Jr. resigned from the llose Marie Pashos and Harhara 1.ingaf *ter, and llonahl f Naymark a Company on March 28.1980. To date of terminatmn of employment he acceived director. Each policy is in the face amount of $750.000 00. Insurance policies
$17.000 which is inchuled m the hgure set forth above, were purchased on the hves of the wives of ti.e three principal shareholders because under the commumty property laws in effett in Cahfornia. .he wives ihmuneration of Directors are effectively deemed to be the owners of one. half of .dl community property.
-and, aqion death, their share of g ommunity property is subject to estate f.ncs.
Directors who are ab.o employees of the Company do not receive adth,' Tin proceeds of the insurance pohcies are required to he undized follow. tional compensation by virtue of their serving on the Board of Directors- ing the death of the insured to sedeem shares of the Company's Common Those directors who are not otherwise employees of the Company are com- Stock incimlable in the msured's estate for Federal estate tax purposes; how. pensated at the rate of $500.00 per meeting plus an annual retainer of $5.000.00 ever, if an insmed wife predescases her insured husband the sedemption is half of which is paid quarterly and the other half of which is paid based on at Me option of the imonal representatives of the insuryd wife's c> tate. II - Comiuny Performance. Directors are all reimbursed for expenses incurred in O' equal "P'*n to M i y'j of the fair market value of such stiwk on the date of death oreseMsed behalf of the Company. the d.ae of redemption whichever is less. The sedemption is m.mdatory on the death of an insmed hush.unt on the death of Ronaki I.. Naymark and on Outstanding Options IIctd by Officers and Directors the de.nh of an insured wife who sumves her msured bushaml. In such case. the iedemptmn pnce is 9st1. of the fair masker vah.e of sm h stiwk on the As of Aprd 15.1980 the following options to purchase shares of (,.ommam date of death of the insured. To the estent insurante pnseeds are not utdi:cd Stock were held by olhccrs and threstors of the Company (10 persons).. As to sedeem r. hares of the Company's Common Stock, suth powceds wdl be of such date no opimns were held by any director named above. mhle I to the Conqiany's working capital. 8 9 f m
=
I
.trino event is the Company obligated to pu'rihase shares of its Common Arthur Andersen & Col has previously aded as the Coenp.iny's ainhtors and J
- Stock from l.any source . other : than the msurance proceeds. .however, the reported ' oei' its Imancial: statements foi all prior fiscal. years commencing :'
Company' cannot wnhout the insured's consent. Imrrow against or otherwise - with the hscal year emhng January ~ 31.1972.: encumber the pohcies in a manner or to any essent whnh wdl cause the net S,ince the C unpany is no seguired under elic laws of the S. tate of Cah. m
-amount payable 'to the Company on death to be less than'the face amount fornia to obtain sharehohler approval of its appointment of a testihed public <
of the pdicy, The purpose of the redemption is to provide the insured's estate: \ . accountant.,the lloard retains alie right. without shareholder approval, whject . with funds to pay estate and inheritance taxes. to Cahforma I.aw. to make sus h appointment. Whde the uppmnement may-l The. miti.at cash cost to the Company for the inwrance premiums was l>e made 4 . $ 113.561.00. One pohcy has been paid following the death of the insured g gg ,gwithout
,g, shareholder
,, g, approval, j g ; the
,y lloard , c,onsidered
, ggit appropriate shareholder. Dus payment after partial esercise of -the repurchase option standmg shares of the Company's Common Stock is requireil for ratification
' resulted in an additmn of $651.052.55 to the Company,s . working capital. of the appointmentc The Company's Ibrd of Dnectors recommends ratifi-
= Annual eash costs for premiums are espected to increase to $122.867.00 by ' ' cation. If the nomination is not ratihed. the Board of Directors wdl reconsider .
the tenth year and decrease thereafter.< lly reason of the prohibi, tion from 4, ig ,g
; borrowing against the cash surender values of the polwies. the Lompany s available workmg capital will he reduced annually by the entire cash cost . A. representative of Arthur Aiulersen 6 Co. is espcsted to be psesent'at.
' of the pohcies. I.ife insurance premiums are net deductible expenses for federal the shareholders' inceting and will he given the opportunity to make a state-s income las purptwes.
ment il desiredJ Such representaine wdl also le avadable - to respond to '
-The Company's net earnings alter tases will he charged ann'ually in an ' . appropriate questions.-
amount copial to the cash cost to the Company, less the incre.ue in the cash . Audit services performed b Arthur Andersen & Co. for the year entled . { , surrender value of .the polnics during the year.- fly;teawm of the substanti.il , , January 31.1980. consisted of their esamination of the conwhdated Imancial 'l annual increase in cash surrentler value after the first program year. it is cste* statements of the Company and its subsidiaries for the year ended January 31. mated that the annual net (harge to in(sune wdl slecrease from .582.232.91 for 1980 and 1979. services relateil to fdmgs with the Securities and Esthange j the fiscal year ended January 31.1976 to a punt where m the eighth prograni Commission. and consultation in connection with 'various audit-related account.
, ;) car it is estimated that annual increases in cash value will exceed premitun inq matterss Nonamlit servkes pe formed during the year and the percentage j cost. The annual net charqe to income for the fiscal year ended January 31, r&tionship which the fee for smh nonaudit servkes hears to the ambt fe'es
' 1980 was $11.618.
incimled consultation on and preparation of certain espatriate employee income
. As previously stated in the footnotes under Remuneration of Directors and tax returns (25.155.), a hnancial review of an acquisition camlidate (10.35;.) '
Of fisers, the Company has certain obligations to Messrs. Sherman Naymark. and consultation regarding an enhanced fulling and esamination . System . Thomas I. Pashos and John W. I.mgafelter to make certam payments for ten . (8.8'li.). for a total of 41.5%. The Board of Directors does not have an amht years following their deaths to their designated beneficiaries. The Company or examining committee. Nonamhr services weic not appioveil in ailsance has procured msurance on the hves of such shareholder /olikers in the amount by the Board of Directors of the Company but were approved in advance by - 1 ol $151.000. $97.000 aml $70.000. sespectively, whkh may he used to ilischarge 2 the Company's management whkh considered. among other things. the pos.
- the Lmnpany s obligations for such death I.cnefits. The annual premium cost sible effect of the performance of such services on the auditors indepcmlence.
j to the Company for sm h polkies is $13.117.11.1.ile insurance premiums are not l - . deductible espenses for lederal income tax purposes. The Company's net earn-s after EMPI.OYEE easesPROPOSED will be AMENDMENT chsged annually TOin an .unount equal to the cas STOCK PLIRCilASE PI,AN ing' to the Company. less the increase in the cash surremier value of the policies j durmy the year.The cash surrender value inirease with respect to such policies In November of 1972 the Company adopted an employee stewL purthase for the hscal year endeel January 31.1980 with $11.62515 resulting in a net plan (the *' Purchase Plan") pursuant to whkli employees were ami are.
- c harge to income for such year o5 51.492.29.
; These are no .Icaal actsons, in which any threttor leurrent or proposedl. }grantid certain lan is more fullyoptions to below.
described punbase shares Aher giving of Common clicct to the 3SuicL. TheofPurchase for 2 sphs ,!
; of ficer or af fihate of the C,ompany is a p.uty against,the Con,ip.my or in whkh Common Stock effective March 17. 1980. 97300 shares of Cmumon Stock are now subject to the Purchase Plan. The Comp.my's lloard of Directors !
they have material mterests that are adverse to abe Company s mierest. , 5 t (the "lloartl"), subject to the apprmal of the sharehollers at this meeting. 1
) APPOINTMENT OP INDEPENDENT has adopted an amendment to the l'urchase Plan increasmg the number of shares subject to options granted under si.th Plan by an .uhheional 52.500 d
2 PtIRI.lC ACCOtlNTANTS I' shares for an aggregate of 150.000 shares. *
. The Ib.ud of Dues tors has appointed Aitbur Amtessen 6 Co- as imic-
.' pendent pubhc aetountants to examine and report to the sharehoklers on the The Ibard beheves that the Punthase Plan provides a >ubstantial and imancial statements of the Company for the year endmg January '31.1981. henehtial stimulus to perfo mame im the part ul employees of the Company 1
.l 11 .
10 f 1 4
-_ ~ _ _ - . . _ . ._ .
. m ..
9 6 J sed helps the' Company to retain its' employeesc The lloard recommends that - . realizes ordinary income to the extent of time lesser of (i) the annount by whicli
- the shareholders vote for approval of the amenthnent. the fair market value of the stock at the time the option w.is granted exceeded -
s Approval of the amendment to the Purchase Plan.will require a vote of the prwe umler the option or bi) the amount by whnh the fair market v.duc7 the holders of a majority of the shares of Common Stock represented at the L.of the stock at the. time of tiisposition escceded the option price. Gani in the meeting. Approval of the aniendment will mtrease the aggregate number of extess of the above amounts wdl be entitled. in general, to long terni capital ' shires subject to the Purchase Plan to 150.000. . gain treatmen J The long. term capital gain will. however. he subjett to the . Desen.p tion of the Purchase Plan
' alternatise maximum tax provideal for m 'the Tax liefoam Ait of 197n. The
- Nrtira and Purpose -
- Company will not .he allowed a federal income tax deslucinm upon the grants .
or exercise of an optmn or upam the transfer or disposnion of any shares issued The Purchase Plan authorizes the grant of options to all employees of . thereunder in the tircumstanes set for li . hove. . the Company to purchase shares of :he Company's Common Stock. As of ~
-If the optionce sells shares of stock acquireil by him upon the esenise of '
- April 15.1980, the number of employees of the Company and its subsidiaries c,n option granted under the Purchase Plan. prior to the capiration of two participating in and chgible to participate in the Purchase Plan was 159. The rant or twelve months from the date of exercise. and
. Purchase Plan is not subject to the provisions of the Employment Hetirement years from realizes the date u im Lipon such of g' sale part or all of such gain wdl be treated as earned
- Income Security Act of 1974. . inton,e subine to the 50".i maximum tax rate and only the imome atenhutable The purpose of the Purchase Plan is to induce employees of the Company
~
to the increase in the value of the sh.ncs after exenise of the option. il any._ to remain in the employ of the Company and to encourage such employees wdl be accorded capital gains treatment < in that event the Company will he . to increase their efforts on behalf of the Company by providing a means entitled .to an equivalent Imsint:ss capense deduttion.' The amount of such whereby employees can secure or increase their proprietary . interest in the income ami dethweion wdl equ.d the cuess of sl.e fair market 'value of the O Compa ny. option shares on the date of esenise over the opamn price. Even if the shares D1 ration and Modifications d*k Id* "" L*' '"I"e on the opuon esercise date the- *
. 'I.hc Purchase Plan terminates on November 20 1982. The floard may.
same s"Id I"' I'55 amount 'h"" of ordmary income as attributeil to .i participant send a c.ipital
. loss is actoonized equal to the difference between the value of the shares on insofar as permitted by law, from time to inne, with respect to any shares at .) ; the exenise ilate and the sale price,ll the sale prite of the option shares shouhl any time not subject to options, suspend or eliscontmue the Purchase Plan or also excecil the fair market value thescol on the date the option was esercised.
. revise or amend it in any respect whatsoever except that, with,out the approval sucli excess will he treated as long. term or short term capital gain. For pur-of the boklers of the majonty of the outstanding shares of Common Stock of ms M du foregoms die holdendperiod M die option stock wdl he computed
- the Company, no such revision or amendment shall change the number of - from the day after the date of exenew of the option. As noted, any long-term shares subject to the Purchase Plan or permit granti,ng options under the Plan capital gain may he subject to the " alternative minimum tar under the to persons other than employees of the (.ompany.1 urthermore. the Plan may not, without the approval of the shareholders, he amended in any manner - . circumstances noted above.
that will cause options issued under the Plan to fail to meet the requirements Comnion Stock Subject to Purchase Plan of employee stock punhase options as defined in Section 12) of the Internal ~ Thirty thousaml shares of Common:, Stock were imeially _ reserved for Itevenue Code of 1951. as amemled (the " Code"). . issuance upon ewrcise of options granted 'umler the Pmchase Pl.m. An im rease
,Tas IIffect of Purchase Plan on I!mployees and the Company in the number of shares reserved for issuance under the Purchase Plan to
+
- In the opinion of counsel for the Comp.my. the Purchase Plan wdl have 50 000 shares was approved hy.the llo.nd.on October 15.1973 and by the the general tax consequences described below l'his description is not intended
,greholders on May 11.'1974. The number of shares reserved for issuance to be detimeive in all situations. however, and tax advisors should he consulted m.,ider
.m order accurately to assess the particular effect of the issuance and exercise c p,,ydie. Purchase s 301. Plan stock t% was int nbution inreased to 65.000 luly.1971 shares by ami to 97.500 reason shares by of the i of optmns and the sale or transfer of option sim k. mson 4 die Cnpany's 3 for 7 stock sphe effective Manh 17.1980. The Purchase Plan is intended to qualify under Section 123 of the Code. liligibility and I! stent of Participation Pursuant to Section 121 and 123 no taxable income will be reahzed by optionecs All employees of the Company are elit phie for p.uticipation in the Punhase upon the grant of an option under the Pun hase Plan. An optim.cc also will Plan after the completion of su months continuous service with the Company not reahze income upon the exercise of an option if he was an employee of and are to receive their opimns within thirty days of the state that they become the Company conimuously from the date of grant of the option to a date not- eligible therefor. more than three months prior to the date of exenise and if the employee does in no event may an employee he granted an option under the Plan il such not dispose of las stock within two years aber the eption is granted nor within . employce. immediately after the option is granted, owns stock possessing 59 twelve months after the stock is acquired. When the stock is disposed of after or more of the total tambined votinu power or value of all classes of stock of two years from the slate of grant and twcIve months from the date of exercise. the Company. Persons rmployed by the Company whose customary employ-of in the event of the participant's death (whenever onutring) the optionee ment is twenty hours or le:.s per week or is for not more than loc months 12 13 t s
.g . - - , r. s.
W y
'liany calendar scar are not elegeble for options under the Purchase' Pl.ui. No: . Market Value !- ' options under the Purchase Plan shall permit the rights of an optionee to .
As of April 15.1980, the bid and asked prices of the Conipany's Conimon
' purchne stock under all "employce. stock pinchase plans" of the Company Stock on the over-the-counter market were $10.625 and $11.125. scspettively.
.co accrue at a rate'.which exceeds $25.000 of the fair market value of such ' respectively. :
stock for each calendar year in which the option is outstanding.
. Adjtsament of Number of Shares l . . Options Outstanding: Exercise Prices and Expiration Dates - - -
As of Aptd 15.1980 options to purchase 47.349 shares at an average price . Options granted pursuant to the Purchase Plan shall be adjusted in the . sole discretion of the lloard or Option Lommittee as to the number and class . ol $53 per share were outstanding under the Purchase Plan. Such options. l expire at dates ranging from July I.1930 to July I.1982. c of shares covered by any option or the option esercise ppce. or both, in the Messrs. Sherman Naymark. Thomas J. Pashos. John W f.ing' afelter and ! I event of any change in the character or amount of the Conipany s Common
. Stock.'so that an. exercise of an option granted pursuant to the Purchase Plan. Ronald L Naymark are precleded from participation in the Purchase Plan.
subsequent.to such change, shall he on the basis of the number and kind of since each holds in excess of 5% of the Company's outstanding Common Stockc
. secunties the optionee would have been entitled to receive had he actually J Messrs. Jules Pearlman. George Lyon. Wdliam R. Moffat and B. I.ee Karns
-owned the shares subject to the option at the time of the change. In the event are precluded from participation in the Purchase Plan by virtue of the fact .
of any such adjustment. the aggregate number and class of shares avadable -that they are not employees of the Company. Accordingly, no options have for issuance under the Purchase Plan shah be appropriately adjusted and all . or may he granted under the Purchase Plan to any of the foregoing nominees, the provisions of such Plan w th respect to the number and class of shares so officers and directors.- available shall also be adjusted. The following tabulation shows as to certain directors and officers and as to . all directors and ' officers as a group, and solely with ~ respect to Admixixeration the Purchase Plan.-(i) the amount of options granted since the adoption of. At the present time the Purchase Plan is administered by a Stock Option the Purchase Plan. (ii) the amount of shares acquired.since that date through ' Committee estabhshed by the lloard consisting of three directors. 'he '^ercise of options urarued since that date. (iii) the amount of shares sohl ' Exercise of Options during such period of the same class as those so acquired, and (iv) the amount An option grarited under the Purchase Plan.is exercisable as to 50% of of shares subject to all unexercised options hehl as of Aptd 15.1980. the shares twelve months after the grant and as to the balance of the shares i twenty four months after the grant: provided, however that no option may AH Drmors he exercised after the expiration of twenty-seven months from the date of . I R .G fMd ud Olheers grant or whde an optionee shall not he an employee of the~ Company. The - g .p gig , , j option price shall not be less than 85% of the fair market value of the Com- Granted 11-20-72 to i-15.80 pany's Common Stock on the day on which an option is granted. The full - Number of shares 675 315 1.381 option price must be paid for in cash upon exercise of the option. Average per share option price $ 1.12 $ 1.28 $3.20
- Detth. Termination of Employment and Assig' nment iExercised Il-20-72 to 1-15-80 Options granted pursuant to the Purchase Plan are not transferable other . Number of shares NONii NONI, Int than by will'or by the laws of descent and distribution and may be exercised. Augregate option price iluring the hfetime of the optionce, only by him. In the event that an optionee of options exercised - -
$ 1.186 .
shall cease to be employed by.the Company for any reason other than his Aggregate market value of shares death, such optionce shall not have the right to exercise the options remaining on date options exercised - - I ._l l6 unesercised at such time. Whether authorized leave of absence' or absence Sd Il 20 7 t for mihtary or governmental service shall constitute ternnnation of employ- dE I o i 15 80 ment. for the purpose of the Purchase Plan, shall he determined by the Stock tb{s;cr,cjd g, a 15;80 ' Option ComnutteccIf an optionce dies whde in the employ of the Company , NONE NONE 161 Average per share option price and shall not have fully exercised the optien, an option may be exercised. - - - subject to the condition that no option shall be exercisable after the expiration . (')Mr. Randall resigned from the Company on March 28.1980.- ul the term of stKh option. to the extent th.at 'the optionce's right to exercist [n addition, during the period employees (other than those named above) suc h option had accrued prusuant to the Pun hase Plan at the time of his death , were granted options for 182.98lihases at an average option price per share
, and had not previously been exercised, at any time.within one year after the o[ $4]J, .
optinnce's death by the executors or admmistrators of the optionce or by any - All Common. Stock figures have been adjusted in aAcordance with the person or persons who shall have acqusted the uption directly from the optionce terms of the* options to reflect the stAKk distnhutions in 1971 and 1980 and, by hequest or inheritance, where applicable. to give effect to share dividends. 15 i
,,.. - - . . - . . - . . .~ ,
7e g . PROPOSED AMENDMENTS TO - time or from time to time: provided that no action of the Ibril niay, withou't the approval of the holders of the majmity of the outstanding Common Stock - . _ t NONSTATUTORY STOCK OPTION PLAN
. . of the Company, increase the maximum aggregate number of shares of stock i On . November 12.~1971.the Company's lloarit of Directors (the "lloard**) - whish may be issued upon exercise of options granted pursuant to the Non-
^ adopted a non>tatutory stock option plan -(the "Nonstatutory PLin ) pur . ' statutory Plan or change the desenption of the class of employees chgeble to suant to which certam employees were and are greinted options to purchase . receive options or effect any materi.nl amendment in the option price; More -
E shares of Common Stock. The Nonstatutory Plan was approved by the over. no such action may alter or impajr any. option previously granted without
^ ' sharehohlers at their annual meeting on May i Ul975. and is more fully the consent of the holder of such optmn.
4 described below. The Ibard, subject to appioval of shareholders at this meet. - ing. has adopted an amendment to the Nonstatutory Plan inicreasing ' the ' Tax Effect of Plans on Employees and the Company , number of shares subject to opuans granted under suyh plan by an adthtional - ln the opinim of counsel for' the Company, the ' Nonstatutory Plan will . 175.000 shares to an aggregate of 300.000 shares. Concurrently. the lloard' have the general tax consequences descrd>ed below. This description is not - c also subject to shareholder approval. adjusted the purchase price for options imM m Whm in J smuim 6m M m em hu k
. granteil imder the Nonstatutory Plan from twenty cents per share to thirteen consulted in order accurately to aswss the particular ~effect of the issiiance and ,one-third cents per share to be consistent with the 3 for 2. split m and esercise of options and the sale or transfer of option stock. !
the Company s Common Stock effective March 17.1980. ' s
. 3
, Ilased on the foregoing. in general. optionees receiving nonquahl ed stock
~ As .with the Purchase Plan. the lhurd beheves the Nonstatutory Plan . options wdl not-be deenad to have received any income for federal income li provides a substantial and benehcial stimulus to performance on the part of tax purposes as a result of the granting of the options.: An optionee will he the employees of the Company who participate m such Plan anti helps the cleemed to have received earned income (subject to the 50;f. maximum tax)
' Company to retain such employees.The lloard recommends that shareholders upon the exercise of the nonquahfied stock option in the amount of the excess t vote for approval of the amendments. of the market value of the stock on the date of exercise over the option price.
Approval of the amendments to the Nonstatutory Plan will require 'a
- and the Company will be entitled to a deduction for the same amount providing vote of the holders of a maiority of the shares of Common Stock represented - .
the Company complies with certain withholding reqmrements. Thereafter. ,
, at the meeting. - Approval of the amendments will incre.ase - the aggregate j taxation of the ownerslup or sale of the stock will be sinnlar to that of any
. number of shares subine to the Nmstatutory Plan to 300.000 and adjust the other mvestor m, the Company's stock.-
purchase price for shares of Common Stock purchased upon exercise of options 4 granted under the Plan to thirteen and one-third cents per share. - Common Stock Subject to the Nonstatutory Plan
- The Company imtially reserved .150.000 shares of Common Stock for - I Description of Nonstatistory Plan issuance upon exercise of options uranted under the Nonst.itutory Plan. The
- i. number of shares was increased to 225.000 by virtue of the 3 for 2 stock spht
. Nte:rs and Purpose effective March 17. 1980.-
Subject to the limitations set forth therein, he Nonstatutory Plan author- '
- 4 izes the grant of options to key employees of the Company and its subsidiaries Eligibility and Estent of Participation - -
to purchase shares of the Comp.my's Common Stock.The Plan is not subject Options may be granted under 'the Nonstatutory Plan for such number to the provisiors of the Employment Retirement Income Security Act of 1974. of shares and to such key employees of the Company as the Stock Option -
- i. The purpose of the Nonstatutory Plan is to induce cmployees of the Committee appointed by the Iloant may from time to time determine. An i Company to remain in the employ of the Company and to encourage such - OPrionec may be granted more than one option under the Nonstatutory Plan.-
A director of the Comp.my who is not an employee of the Company is not ' I employees to increase their efforts on behalf of the Company by providing a ~ means whereby employees can secure or mcrease their propnetary interest in eM>le to rucive an option under the Nonstatutoiy Plan. the Company. The lhurd beheses the Nonstatutory Plan wdl promote con- 'In no event may an employee he granteil an option uncler the Nonstatutory i . einuity of management and mercased incentive and personal interest in the Plan il such employee. immediately after the optmn is granted, owns stock-welfare of the Company by those who are or may become primarily responsible possessing 5% or more of the total combined voting power or 'value of all
- i. for shaping and carrying out the long range plans of the Company and securing classes of stock of the Company. The Plan ih>cs not state any minimum or
. its continued growth and financial success. maximum number of shares for which options may be granted to an inthvidual.'
Duration and Modifications Adjustment of Number of Shares i' The Nonstatutory Plan terminates not later than November 12. 19M . Opnons grante I pursuant to the Niuistatutory Plan shall be adjusted in -
- The 11oard may amend. suspend or distonimuc the Nonstatutory Plan at any the sole discretion of the Ikuni or Option Committee as tii the number and ;
! 16 - 17 i.
1 a
. . _ _ . . . . _, _ _ _ , _ _ . . . - - _ __ .. - . _ _- m ,_. . _- - - -, _ 4 , . , .- c., o 4
af 4 j ' - -
~
of the optionee or by any person or persons who shall have acquired the '
# L
~
optior directly from the optionee by hequest or inhentance. - > s i Jclass of shares covered by any option or the option exercise price, or hoth in 2 th event of any change in the character or amount of the Company's Common y ,,g,, g '
.. Stock, so that an exercise of an option granted pursuant to the Plan subsequent . . g.
- to such change.'shall be on the basis of the numbu and kind of securities the - As of _ April 15.1980 the bid and asked prices of the Company's Common:
optior.ee wouhl have been entitled to receive had he actually owned the shares - - Stock on the over-the-counter m.ulet were $10.625 and $11.125. respectively;
. subject to the option at the time of the change. In the event of any such adjust-t ment. the aggregate number and class of shares available for 'ssuance i under .
- Options outstandingt Exercise Prices and Empiration Dates
] ' the Plan shall be appropriately adjusted and all elic provisions of the Plan with As of April- 15.' 1980.- optons to purchase 10.449 shares at an average - i
- ' respect to'the number and class of shares so available shall also be adpisted. ' price of thirteen and one. third cents per share were outstanding under theE Nonstatutory Plan. Such options expire at dates ranging from December 12.
, Admiristration 1980 to March I 1985.
Messrs. Sherman Naymark. Thomas J Pashos. John W.' I.ingafelter and) At. ihe present time the Nonstatutory Plan is ailministered b~y a Sinck R nald I Naymark .are precimled from participation in the Nonstatutory f L Option Committee established by the lloard consisting of three directors.
- Plan since each holds in excess of 5% of the Company s outstanding Common : N i : Stock. Messrs. Jules Pearlman, George I. yon. William H. Moffat and B. I.ee
- Estrcise of Options. .
j- Kanns are precluded from participarum in the- Nonstatutory Plan by virtue -
'As originally adopted, the Nonstatutory Plan provided that an option of the fact that they are not employees of the Company. Accordingly, no "
l granted under the Plan was exercisable in two equalinstallments. Subsequently . options have or may be. granted under alie Nonstatutory Plan to any of the foregoing nominees, officers and directors i such Plan was amended to provide for exercise in five approximately equal l installments.' More' recently that Plan has been further amended to provide The following tabulation shows as to certain directors and officers and for exercise in such number of installments (not to exceed hve) as shall be as to all directors and officers as a group and solely with respect to the determined by the Option Committee. Once exercisable, options may be - Nonstatutory Plan (i) the amount of options granted since the a loption of '
- cxercised up to hve years from the date of grant. No option shall be exercised the Nonstatutory Plan. (ii) the amount of shares acquired since that date alter the expiration of the term thereof or while an optionec shall not be an em. .
through the exercise of ' options granted since that date, (iii) the amount of playee of the Company. The option price for all options granted and exercised shares sohl during such period of the same class as those so acquired;and (iv) '
, under the.Nonstatutory Plan prior to March 17.1980 was twenty cents per - the amount of shares subject to all unexercised options hehl as al Aptd 15.1980.
share. The option price for all options granted prior to March 17.1980 but not . . < exercised as of that date is thirteen and one.shird cents. The option price. ' suhicc to approval of the Company's shareholders, for all options granted .
- and exerrased after March 17.1980 is thirteen and one-third cents per share. ' All Directors -:
i < The full bption price must he, paid for in cash upon exercise of the option. Robert :l. ' Greenfield and Directors
. Dempsey Randallp) ' - as a Group g7 Death, Termination of Employment and Assignment
~
i Granted --- 11-12-74 to 1-15 80 . ! ' Options uranted pursuant to the' Nonstatutory Plan are not transferable ' Number of shares. 15.139 9.270 - 31.828 a i other than by will or by the laws of descent and distrehution and may bc Average per share option ' price . $0.1333 $0,1333 . $0.1333 .! l exercised during the lifetime of the optionce, only by him. In the event that 'E xercise I 12-74 to i-1540 , g an optionee shall cease to be employed by the Company for any reason other - . Number of shares 10.674 ,6.177 23.181 ' than his death, such optionce shall not have the right to exercise the options - ' Aggregate option price i . remaining unexercised at such time. Whether authorized leave of absence or of options exercised $ 1.423 - $824 $ 3.131 [ i . absence for mihtary or governmental service shall constitute termination of , Aggregate market value of shares j amployment. for the purpose of the Nonstaturmy Plan. shall be determined , . on date option's czercised $16.810 $29.186 ~ $105.408
^
hv the Stock Option Committee. If an optionce dies while in the employ of the Sales - II.12-74 to i-15-80 t Company and shall not have fully exercised the option. an option may he - Number of shares' NONii 3.102 6.151 )
- exercised, subject to the condition that no option shall he exercisable after linesercised at 4.15 80 l the expiration of the term of such option. to the extent that the optionee's
- Number of shares - i.765 - 1.091 11.317
{ right to exercise shall option had anured pursuant in the Nonstatutory Plan Average per share option price - $0.1111 - ' $0.1131 $0.1131 4 at the time of his death and had not prevmusly been exercised. at any time within one year after the optionce's death by the executors or administrators . P)Mr'. Randall resione I hom the Company on March 28.1980.' - { 4 18 19
)
L
- .c , - - - _
~
. ~ ,
,T. s e
- 'In addition, during the period employees (other than those referred to .'I'* PdS' 3 Y'd'S "* "II ("""""ing einployees of the Company 3h.th was essen-abov:) were granted options for 183.191 shares at an option price per share d"UY 3""I 8" i~~ of the previems years
- mnpensation in heu of umasibutions _
cf thistren and one. third cents. to d 'luahhed prolst sharing plan. All common share figures have been adjusted in accordance with the - OTilER MATTERS - O tirms of the options to reflect the stock distributions in 1971 and 1980 and.
. wherm a pplicabic, to give effect to snare dividends. ~i The management knows of no other busmess to come l efore the meeting.
ifowever, if any.other business properly comes before the meeting, it is the y iraention of the persons named in the proxy to vote on that business in OTilER BENEFITS TO OFFICERS AND , aciordance with their best judgment. j IIIGIILY COMPENSATED EMPLOYEES ~ % . SilAREllOLDER PROPOSALS Im 1972 the Company adopted a qualified stock option plan smiles.;vinch , Pr#sals of sharehoklers to be submitted for consideration at the annual key employees could be granted options to purchase shares of Commc.n' Stock u meeting of the shareholders in June of 1981 must he received by the Company at a price per share equal to the market price per share of such Common "a4 its olhces m Campbell. Cahfornia by the close of Imsiness on February 6 Stock on the date of grant. The plan was intended to quahly under Section 122 l'r81 to be considered. of the Coale. Since iss inception. the following information is provided with To assure repesentation of your interests if you cannot attend the meeting, rispect to options granted under that Plan and exercisable by (i) each of the ' please sign and return the enclosed proxy in the return envelope as soon as
- fivs highest paid olhccrs and directors. or both of the Company whose aggre- you conveniently can.
gite remuneration exceeded $50.000 during the fiscal year ended January 31. liy Onler of the Board of Directors 1980. (ii) all olheers and directors as a group. and (iii) all other ensployees el the Company. No options were granteil under such plan to Sherman - Naymark. Thomas J. Pashos or John W. I.ingafelter or any other director. or M i nominee for diretor, because they were not eligible. All Ofhcers JOSEPil F. CERNY Secretary
- ,1 ^ , '
Robert II. GreenficId and Directors All Other CampheII. Cahfornia Dempsey Randall(') as a Group Employees May I.1980 Options Granted Number of Shares N O N E. 1.625 4.875 61.89'- Tile COMPANY Wi!.L FilRNISil TO ITS RECORD AND llENE. Options hxercised JICIAL SilAREllOLDERS AS OF APRll. 15 1980 WITi!Ot!T Number of Shares NONh, NONE, NONh, 2.000 . CIIARGE. A COPY OF Tile COMPANY'S ANNilAL REPORT ON A 9pregate Exercise FORM 10.K. INCf. TIDING AI.I. FINANCIAL STATEMiiNTS AND , I rice - - -
$11.500 SCllEDt1LES TilERETO. TO Tile SECllRITIES AND EXCilANGE Aggregate Market COMMISSION FOR ITS FISCAL YEAR ENDING lANtlARY 31.1980.
Value at I*ime Tile COMPANY WILL ALSO FLIRNISil A COPY OF ANY EXilllllTS of Exercise - - - 130.375 TO St1Cil ANNtlAL REPORT AT A FEE I.lMITED TO Tile COM-
" " PANY'S REASONABLE EXPliNSES IN FtlRNISl!!NG Tile SAME.
! nter oI SIiares( ) NONF. NONF. NONF. NONF. Tile FOREGOING COPIES WILI. IlE FilRNISilED AS PROVIDED
(')Mr. Ramiall resigned from the Company on March 28.1980. AHOVE IIPON WHITTEN REQtlEST TO Tilli SECRETARY OF (:) All options under this plan have expired. Tile COMPANY AT ITS CORPORATE OFFICES AT 1700 del.L AVENilE. CAMPHEI.L. CAI.lFORNIA 95008. During the past five years the Company also has made certain discretionary honus plans available to its employees. Pursuant to these pbns. honuses were , paid to such employees of the Company as were selected to participate by the Company's lloard of Directors or management. During the p.nt five years the 1 discretionary honuses paiti to Messrs. Sherman Naymark. Thauas 1. Pashos. John W. l.ingaletter. Robert II. Dempsey, aml Greenfich! A. Randall. lr., were' *
$50.000.121.000. 52 LOOO. $78.092. and 510.llM respectively. Dming the s.une perimL Imnuses paid to all of fi(crs and directors as a group were $277.667 amt to all other employees $5M1.869. These fiquies curlude a Innus paisi in eat h of 20 21 i
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TO OUR SHAREHOLDERS: Quadrex Corporation's First Quarter revenues were a record. high -
$10.122,000 compared to S3.827.000 for the same period last yeat an increase of 164't.The Company's net income of $874.000 (28C per share) was also the highest for any' quarter in the Company's history. compared to $364,000 (12C per share) for die same period last yeat The earnings per share for the first quarter of last yea.r have been adjusted to reflect the three for two stock split which was elfective March 17,1980.
The Company recorded orders of $11.8 million for the first quarte r compar ed to $10.7 million for the first quarter of the prior yeat The backlog at April 30,1980, was
$22 million compared to $ 16.6 million at the end of the first quarter last yeat At the end of the quartet the Company's work force stood at 610, compared to 270 at the end of the first quarter last yeat Based on the Company's earnings and revenue prospects for de coming yeat the Board of Directors announced a first quarter dividend of SC per share payable on July 15,1980, to shareholders of record as of June 13,1980.
s () m (Ap wnd , Sherman Naymark President Campbell. CA July 15.1980 s
rr - CONSOUDATED BAtANCE St ~IETS CONSOIIDATED STATEMENTS OFCHANGES April 30.1980 (unaudited) and J.snuary 31.1980 IN FINANCIALPOSITION(unaudited) For the Quarters Ended April 30.1980 and 1979 1980 1979 ASSETS . Current Assets Net incorw- $ 874.000 $ 364.000 Cash and short terrnirm.strne nts $ 4.041.314 $ 4.058.445 Depreciatuxiand itwestments in come run sto( k, at cost asnortizotson 126.000 . 57.000 whn h appronirikstea rnarket 299.076 247.192 Working capital leade recervables. net ol aflowances provided by of $216.000 7.925.735 6.466.370 operations I.000.000 421.000 Irwentones 52.534 73.542 Proceeds from eaertise Prepayments and other 398.570 287.030 of stock options 107.000 21.000 TotalCurrent Assets 12.717229 11.l32.579 Cash dividends (l55.000) (95.000) Purchase of plant Plant and Equipment . at cost less accumulated and equipment (l62.000) (5.000) depteciatsonand amortizationof $1.092.892 Otherpt (29.000) (33.000) and $981.986 sespectively 3.627.193 3.581.136 . Increasein Cash Sus render Value of Life insurance iblicies 463.303 437203 Cost in Excess of Net Assets Acquired 743.09I 752.490 working capital 5 -76I.000 $ 309.000
$ 17.550.8 I 6 $ I 5.903.408
=: = = = = .-.== =
UABluTIES Quarter Ended April 30(unaudited) Curtent Uabihties 1979 Notes Payable $ 228.515 $ 124.125 1980_ Current porton oilong-term debt 91.093 72.324 Revenues $ 10.122.000 $ 3.827.000 Accounts payable and accrued expenses 1,793.619 1.633.323 Cost and Espenses 8.342.000 3.087.000 Accrued and defenedincorne taxes 4.090.493 3.549.803 Income BeforeTaxes 1.780.000 740.000 i TotalCurrent Liabilities 6203.720 5.379.575 Provisions for Inc meTaxes 906.000 376.000 Lmg Term Debt I.271.617 1275.313
$' 874.000 $" 364.000 Netincome
~'"
SHAREHOLDERS
- EQUITY Common stock. authorized 7.500.000 shar es; Netincome Per Share $ 28 $ .12 outstanding 3.078202 and 3.039.453 shares.
respectively. stated at 2.446.853 2.339.426 Numberof Shares Retained earnirwjs _ 7.628.626 ,6.909.092 Usedin Cornputation 10.075.479 9248.518 of Netincome 3.131.616 2.949.593 Per Share
$ 17.550.816 U15.903.408
ANNUAL MEETING - s.unics ani urowth in it=: C#annan/s weak intce. At Guadrea Capratuw6 annual mectity of tir end of Or pur fiscal year. tir Cunguny had shareholders w n hekt un luesday. June 10.1980.at 250 employt-es As of May 1.1980, tie wak forte the Company's head.purters in Campheft. CahforJ totaled 630. of whnh 124 were contract ~jobshop" nia Approxinutely sewnty live persons atteruk d employees. the meeting Of the 3.0n.558 stwies choitde to vote Mr. Naymark reviewed tte current simus at the meeting. 2.534.196. or 82 percent were repre- of the nuclear industry There are currently 72 plants sented in person or by proxy - in the (LS. with operating hcenses. Ilxse plants The ~ shareholders re-electal Shernun produced approximately 14 percent of the notiors Nayuurk. Thomas J. Pashos. John W Uryafetter, electricity last year. In addition, there are 91 plants Ju!es Wartman. Ronald L Naymark. George J. Lyon, under construction and 21 on order bringing the B. Lee Karns, and William R. Moffat as Directors of total to 184 plants. The majority of these will be in the Company Each director receiwd at least operation by 1990. The Company has geared its 2.430.347 mies or % percent of all votes cast for the business thrust to be responsive to the ergineeririg election of directors. The shareholders also ratified and service needs of thesa operating plants. Over-the selection of Arthur Andersen and Company as seas. there are 142 plants with operating licenses, indepersient putdic accountants for de Company for 141 under construction and $2 on order for a total the fiscal year ending January 31.1981. T he other two of 335. items which came belcre de shareholders during Mr. Naymark summed up his pesentation tie bussress portion of the meeting concerned by stating Ow Company's objectiws: 1) To provide amendments to the Company's Employee Stock technical services to the electric power generating Purchase Plan and Nonstatutory Stock Option Plan. irwiustry. 2) To empand the Company's services more Amendments to each plan were appromt by the broadly and in-depth. 3) To be responsive to a shareholders. Follwing tie conclusion of the busi- changing marketplace. 4) To diversify through ness portion of the meeting. the shareholders heard internal expansion, acquisitions, and other means, pesentations from officers of the Company review- 5) To achieve a 30-35 percent average annual iry the past year and pedicthj certain activities growth in revenues. 6) To achieve a 20 percent an-which will take place during the current fiscal yeat nualincrease in earnings. - Sherman Naymark. President. reviewed the Thomas J. Pashos. Senior Vice-President.
' Company's fir:ancial results for the year ended discussed the Company's involvement in various January 31.1980. The results far exceeded die Com- engineering programs. The Company is currendy pany's growth objectiws. The results showed a 73_ engaged in major work in power plant piping percent rewnue grwth and 155 percent eamings analysis. This effort has grown rapidly in recent grwth ow: the pior fiscal yearh the first quarter of months and currently has over 150 people working de current year, as reported in unis statement, ra w- in this area. T he engineering organization is also in-nues mes e up 164 percent and earnings incteased I40 volved in plant design review hcensing. computer percent owe the pior year's first quarter. apphcations, fire protection analysis, plant modifi-Mr. Naymark discussed the growth of cations, waste management and decontamination.
Company facihties during the past year. At the end of Additionally they assist utilities in complying with the pevious fiscal year, the Company occupied new regulatory requirernents established by the Nu-59.000 square feet of space in Campbell. Pitts- clear Regulatory Commission. burgh, and Tulsa. One year later.the facilities at four The Company is also involwd in a broad locations, including the Company's wholly-owned range of development pograms in whrch it is invest. subsidiary Health Physics Systems. Inc.. totaled ing its resources. These include new computer 80.000 square feet with an additiorial 17.000 square codes and applications, waste management, qual-feet currently urw er construction at the Company's i ity assurarre, fossil plant technology. new dessn headquarters in Campbell There has also teen a starxiards. and other special projects.
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, _ , NulW9t . N, . I nlPsey, . "M f)H M ' Yit 'tN [Wlect. NSIC was thi Ehrst consuk.snt Iss las hertb ic ,
. Pteskh nt.thwirsmi tie Comp.uty's at tmties in iI:e mnmercial rulcar .sr tevitws in tir ittyles Repub~
Operatuis asui hopet is orgasuiatuzi. In .ukhtiun to he of China asul the Erst Arnericasi tornguny to re : field pessorwwl in Campbell, httsburgh armi luisa. Teive a contra 1 f om the Kl;B.
- ttw Company h.is liuelt a project inwrugement team . A six-member NSIC team visated the PRC
, durisy tre past ye ar. Thrs capability is responsihie J recently to paesent some of its Endings regarding l , for nunagery large Company pojects across orgate the study, and other visits are planned later this year. l' .. iratiosulluws. Mr. Ungaletter emphasized that,if the Chinese de-Mr. Dempsey focused on three areas in cide to develop nuclear power. and all indications which the Company is investing resources in new, . are that they will. NSK hopes to play a central role in . ,
' business areas. The first new busi:w 5s area is decon- working with the Chinese government. Before that tamination/ decommissioning. The Company is on- ; can begin.however,the U.S. and PRC must come to :
garuting a capability, in cooperatiori with Health certain bilaterat agreernents which will allow for the , Physics Systems. Inc., to provide products services transfer of nuclear technology ~ in this area to nuclear plants. This involves engineer-ing applications. Geld work and manufactured prod-ucts. NI plants need the decontamination /decom-' missionity capability to be able to respond to .
' routine as well as non-routine clean-up demands. -
' The Quadrex/HPSI team is preparing to obtain a i growing share of this market.-
l ' ' A second area of dewtopment is operator training. The accident at Three-Male Island demon-strated the need to improve the industsps training - capatulity improvements are needed in the areas of , educational requirements, curriculum, certifica-tion, and recentification. Quadren is currently de- Q% veloping pograms to be offered to the industry in gg-g this area. i rm o,, % The final area is ' plant simulation. The ~ . campe== c4ws.a.4 note Company has previously announced its plans for ' * **** N
. the development of an Operational Safety Simula- ,s.,,,,,c.,,,,,,,,
. tor which is a revolutionary advance in the industrys - e emm== es e= emes ability to respond to a plant emergency. Iri additiori. C8"'**'* 0"
l the Company is developing its capability to assist
' the industry in responding to regulatory require- c ,,,, 'fsei M
1.osoo ments for plant specific training simulators. ! 8h='"'s T he final presentation was made by Jack es Lingafelter. Senior Vice-President and President of Nuclear Services International Corporation (NSIC). TC i n ne w ~ j Mr. Ungaletter concentrated his presentation on a - campi == cowa.e 4 m ~ ! contract sigwd by Nuclear Services International * * ' * *6 N Corporation w 'h the Kwanatung Provincial Electric ,,, , l ! Bureau IKEB). Guangzhou. People's Republic of o.w o., a ss.,,, r j China. The contract appoints NSIC as the official cre tiscopina c =paa, , consultant to assist the KEB in an economic feasi- 6'S **' S"' , bility study of a commercial nuclear power plant. ' * ' * * * * *
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TO OUR SHAREHOLDERS: Quadrex Corporation's Second Quarter revenues were a record high
$11,406.000 compared to $4,889,000 for the same period last year. The Com-pany's net income of $957.000 (31C per share) was also the highest in the Company's history, compared to $478,000 (16C per share) for the Second Quarter of last year.This represents an increase of 133% in revenues and 100%
in net income over one year ago. The combined totals for the six month period ended July 31,1980 were revenues of $21.528,000 compared to $8,716,000 for an increase of 147% over the first six months of last year. Net income for the same period was $1,831,000 (59C per share) compared to $842,000 (29C per share) an increase of 118%. The Company closed the Second Quarter with a backlog of $27,2 million, compared to S22.8 million at the end of the Second Quarter last year. Based on the Company's earnings and revenue pros,:ects for the coming year, the Board of Directors declared a Second Quarter dividend of SC per share. The dividend is being paid on October 15,1980 to shareholders of record on September 15,1980. d . . - . . (9M Sherman Naymark President ) Campbell, Califomia ! October 15,1980
CONSOLIDATED BA1ANCE SilEETS CONSOUDATED EARNINGS July 31.1980 (unaudited) and January 31,1980 Quarter Ended July 31 ASSETS
.A@ 31 January 31, Current Assets Cash and short term arwestments 8 3.670.000 9979
$ 4.059.000 Irwestments in common stock.
at cost whKh appronsmates market 315.000 Revmues $11.406.000 $ 4.889.000 247.000 Costs arul Empcnses Trade receivables. ret of allowances of 9.459.000 _ 3.942.000
$350.000 and $216.000, respectively 9232.000 6.466.000 income Before Tanes inventones 92.000 1.947.000 M7.000 Prepayments and other 73.000 Prowsion for incorm Tames 950.000 99_0,000 469.000
_ 287.000 Total Current Assets Net income 4~ ~,000 957 $ 478.000 I4259.000 11.132.000 ~ Plant and Equipment, at cost less accumulated depreciauon and emortuauon of $1.195.000 Net income Per Share $ .31 $ .16 and $982.000, respectavehr 3.934.000 3.582.000 Cash Suner*r value of Life Insurance Polecies 490.000 437.000 % MsMdA 31 Cost m Emcess of Net Assets Acqusred 732.000 (unaudited) 752.000 UABillTIES *$4I5g-- $15jo_3M - Current Lsabilities Rewnues Notes Payable $21.528.000 $ 8.716.000
$ 390.000 $ 124.000 Costs and Empenses 17.801.000 7.029.000 Current portson of long term debt 77.000 72.000 Accounts payable and accrued empenses 2.409.000 1.633.000 inc me Bef re Tames 3.727.000 1.687.000 Acciued and defened income tames 4.317.000 3.550,000 P' "5' ns for incane Tames _ l.896.000 845.000 Total Current Liabihues 7.193.000 N I"C**'
5,379.000 8 1831.000 $ 842.000 Long Term Debt 1229.000 1 275,000 Net income Per Share $ .59 $ y SHAREHOLDERS
- EQUITY Common stock, authonsed 7.500.000 Number of Shares Used in shares; outstanding 3.083.259 and Computabon of Net 3.039.453 shares, respectavely, stated at 2.561.000 inc me Per Share $ 3.115.190 $ 2.962.781 2.339.000 Retained carrun9s _ 8,432.000 _ 6,910.000 10.993.000 _9249.000 CONSOUDATED STATEMENTS OF CHANGES $19.415.000 $15,903.000 IN FINANCIAL POSITION For the Six Months Ended July 31.1980 and 1979 1980__ 1979 Net income $1.831.000 Depreciauon and amortaation
$ 842.000 259.000 1I4.000 Cash surrender value ancrease J53.000j J52.000)
Working capital prouded by operations 2.037.000 904.000 Preceeds from exercise of stock optsons 122.000 40.000 Cash d.wdends 009.000) (191.000) Purdee of plant and equipment (591.000) Other, net (342.000) _ 54.000 (I I,0tXJ) Increase in worlung capital $1.313.000 $ 4tM.000
QUADREX CORPORATION BOARD OF DIRECTORS at Berkeley, an MS. from San Francisco State COMPLETES SECONDARY NAMES THREE VICE PRESIDENTS Co!!ege and an M.S. in Business Management STOCK OFFERING At its meeting of August 26.1980, the On Thursday. September 18.1980. Quad. Company's Board of Directors named three rex Corporation completed a secondary offer. new Vice Presidents. ing of 797.500 shares of common stock for tluee selling shareholders. The three selling Anton F. Kitz was appointed Vice President, shareholders were Thomas J. Pashos and John Domestic Marketing. Reporting directly to the # 16 W. Ungafelter, both Senior Vice Presidents, President.Mr. Kitz is responsible for evaluating and John R. Ungafelter, the son of John W. industry requirements, developing corporate ' Ungafelter. John R. Ungafelter is not associated marketing and business plans, coordinating w with the Company. and integrating Domestic Marketing activities Messrs. Pashos and Ungafelter will resign and assisting professional staff members in planning and executing project activities. He is
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from the Board of Directors at its next meeting a registered professional engineer with over 11 f h and mil remain in their present capacities through years of experience in design and analysis of the end of the current calendar year at which nuclear and fossil fueled facilities. Mr. Kitz holds John L Wray was appointed Vice President, time they will resign as officers and employees. a B.S. in Engineering from the University of Engineering. In this capacity,Mr. Wray reports For truee years commencing January 1,1981, Illinois. directly to the President and directs the work of they will remain available as consultants to the more than 450 engineers and scientists in me-Company. yge a g . * ^*
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chanical, electrical, chemical and reactor engi-t . p', , neering as well as in licensing and environ-in connection with the offering. Company , , i. mental work, specialized computer program-representatives spoke to gatherings of security analysts, financial institutions and stockbrokers fj
.fl ming, design /drafbng, and vanous project efforts.
j) (jk p Mr. Wray is a registered professional engineer in San Francisco Palo Alto. Los Angeles.New .~ }j Ng. pg with over 20 years of experience in the nuclear York. Boston, Philadelphia and Hartford. The managing underwriter for the trans- h} s H[
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power field. ife holds an M.S. in Mechanical Engineering from Missouri University, an M.S.
' i in Mechanical Engineering from Stanford Uni-action was Drexel Burnham Lambert incorpo- E,.. , 1 versity, and an M.B.A. from the University of rated. ,'
i ., ., D Santa Clara. U=o.r .' d M j , ., N 1; ;,7,{ Ronald L Naymark was appointed Vice fk ' M President. Projects and is responsible to the President for the direction of managers who ffjr[' j war drtf
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. g ,g,. q tions. Mr. Naymark is a registered professional I . '* ' 1/ it y engineer and holds an undergraduate degree V
- from Pnnceton University, a B.S. in Nuclear Engirteering from the University of California k '.J ,
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,. . J TO OUR SHAREllOLDERS-Quadrex Corporation's third quaster nwenues were a record high $14.267.000 compared to 56.417.000 for the same period last year. The Company's net income of S1.041.000 (33C per share) was also the highest of any previous quarter. This compares to $720.000 (24C per share) for the third quarter of last year. This represents an increase of 122% in revenues and 45% in earnings. The combined nine month figures reflect revenues of $35.795.000 com-pared to $15.133.000 for the first nine months of last year and net income of 52,872.000 (92< per share) compared to $1.562.000 (53< per share) for the same period last year. The Company ended the third quarter with a backlog of
$45.2 million compared to $27.2 million on July 31,1980.
Based on the Company's earnings and business prospects for the future, the Board of Directors declared an increase of 40% in the quarterly cash divi-dend to 7< per share from the SC per share paid for the previous quarter. The dividend is payable on January 15,1981,to shareholders of record as of December 15.1980.
- ) m %-ad Sherman Naymark President Campbell, California January 15,1981
CONSOLIDATED llALANCE SilEETS CONSOLIDATED EARNINGS October 31.1980 (unauditid) and Jassuary 31.1980 Quarter Ended October 31 ASSETS October 31 January 31 (unaudited) Current Assets Cash arnt sh(wt term unestnwnts 5 1.730 (X W) 5 4.059.000 1980 1979 Irwestn= ots in cinvunori sitx k. g , . g at wst which anunminutes market 315JXX) 247.000 Tr.nle recenatks. nre of aik>warv es c4 Ce W @m WW (99 N 5350.tXX) arid 5216.000. resg= c tively 10.731.orO 6.466.000 Income liefore Taxes 2.106.000 1.424 000 e irras .md otter i " ' ' " ' " " " ' "
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Total Currer4 Assets 16280.000 I l.132.000 . Net income $_l,011.000 5__ J20,000 Plant and Equipnwnt. at cost less accumuLited degweciatson and ariux1 station of 51,181.00t.) Net income per Share 5 31 5 24 atal 5982.000. ress e twely 4.272.t;00 - 3.582.0(o Cash Surrender Wlue of Life Insurance Polkies 184.000 N.ine Months Ended October 31 437.000 Cost in Laress of Net Assets Acquued 720.000 _752.000 (unaudited) UABlWTIES $456.000_
$15.901000 Cureene t iabilites~ Revenues 535.795.000 5 15.133.000 Notes Payable - 5 72.000 $ 124.000 Costs and Espenses 29_p62,000 12.022.000 Current porteun of long term detd 62.000 72.000 Acccanits payatde arid accrued engwnses .3.097.000 1.633.000 incare Defwe Taxes 5.833.000 3.111.000 Aurued and deferred income sames _5 1129.000 3.550.000 Prasion fm Incane Taxes :2.961.000 1.549.000 Total Current Leatalities _8.360 000 _5J79.000 Net income 5 2.872.000 $ ~~1 ,562.000
- - ~~-~ ~~~~~
Lon9 Term Debt i203.000 1275.000 SitAREHOLDERS* EQUITY Net incane per Share 5 92 5 .53 Common sicx k. authcuued 7.500.000 Number of Shares Used in shares, outstanding 3.087.958 anJ Conputatum of Net 3.039 453 shaees, respectwety, stated at 2.575.000 2.339.000 Income per Share 3.123.379 2.967.738 Retained eartungs 9.318.000 _6.910.000 11.893.000 9 249.000 CONSOLIDATED STATEMENTS OF CHANGES 521,456.000 515.903.000
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IN FINANCIAL POSITION (unaudited) For the Nine Months Ended October 31.1980 and 1979 1980 1979 Net income 52.872.0(X) $ 1.562.000 Depreciation and amortisatwwi 400fXX) I75.000 Casti surrender value increase - _ G7 Ot_)0) Working cagutal provated by operations 3.272.000 1.660.000 Sale of life insurante guelnics 253frX) - Proceeds from exercise of stor k optuxis IV 1NK) 55.0(O Cash dwulends (46bMW)) (307.0001 Pure haw of plant arkt eqtapriwru (l.ONinN)) (502.000) Other. ret 27,t W G JI6h000) Irw rease iri wrukiruj t.alatal 52.It,/JWH 5 739.(40
r NEW PitESIDENT NAMED NEW DiltECTOR TO QUADREX INTERNATIONAL OF ADMINISTRAllON AND PERSONNEL NAMf!D Following a confirnutiori by the Compa g i ny's Ikurd of Dirntors. Russell J. Ifarnrru r tus 4
. T- two argonted Diredor of Administration and p
( I l'ersonnel. Mr. Ilarnrner reports direcdy to the President arid is responsible for all corporate Administration and Personnel activities. Mr.11ammer previously serves! as Quadrex l Corporation's Manager of Investor Relations. 7 Nnager of Public Affairs, and Manager of Ad-mirustratiort Mr. flammer will retan his investor Relations management responsibihties.Mr.lfam-mer holds a B.S. from the University of Santa Clara and an M PA. from San Jose State Uni. versity. At its rnecting of December 2.1980, the Company's Board of Directors confirmed the dppointment of Dr. litnMr P. Bupp as President of Quadrex Interrwt.orwl and Senior Vice Presi-dent d Quadrex As President of Otairex frver. NEVADA INSPECTION SERVICES. INC. national. Dr. Bupp directs all Interrutatif adu. SIGNS AGREEMENT WITH ities. As Senior Vice President of Quadrex Cor- STATE OF NEVADA poration he is responsible for corporate pl.m-ning and nunagement services of Quadrex. Sherman Naymark. President of Quadrex Corporation, announced on December 8.1980 Prior to joining Quadrex Corporation. Dr. tie execution d an agreement betwwn the State Bupp served as Vice President of Engineering of Nevada and Nevada inspection Services. loc and Technology for Exxon Nuclear Company. a wholly-owned subsidery of Otairex Corpora-Previously he was Professor of Nuclear Engi- tiort Wdh the agreement Nevada inspection Serv neenng at Oregon State University. ices will provide an iridependerit audit /qualifi. Dr. Bupp has over 30 years experience in C# " P' 9'#" * ' * ' " " ' '""*" the nuclear industry and has served on a nunt a pment to a MwMW sd6n NwA ber of natiorial scientific organizations. lie is P"'P ** ' "* 9"" 'C" " P' 9 * I curnntly on the Board d Directors of the Amer. E' # 'd ' d' *# *# '" d' #" ' " " ' " scan Nuclear Society. E' 9'd* I* N" '#'" "# d "I
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gxove compliance with the packaging arxl tr.wis-Dr. Bupp hohls a B.S. in Chemistry hom gxxtation regulations of both the State d Nevada the University of California Berkeley; and a and the lederal govertiment. I arry Osness has th D en Physwal Chemistry Irorn Oregon State twn rumed Nruger of Operations fur Nev.sta Univer sity. Insgution Sersices loc.
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RICilLAND SERVICES DIVISION OPENS IN NORTilWEST On Dwemlier 2.19t10 a sw w divisori was establesinst to perform services in the areas of decontainination. decommissioning, and the timtment of wirt.m in nuc lear arxl non rxxlear itulustries to impove product quality and per-sonnel produdivity. The Richland Services Drvision of Quadrex Corporation, law! quartered in Richland. Wash- - irviton, tus establisixx1 technical working agree-ments with American Building Maintenance, Battelle Memorial Institute, and liydrite Chem-ical Company. Health Physics. Inc., a wholly-owned subsidiary of Quadrex. is also involved in the cooperative program. The combined resources of these com-panies provide the Richland Services Division with a broad range of capabilities to sesve the nuclear industry in the fields of decontamina-tion and decommissioning. ii.W. Arrowsmith has t>een appointed to manage Richland Serv-ices D vision. NORTHWEST PROJECTS OFFICE BEGINS OPERATION On December 4.1980. Quadrex Corpora-tion opened the Northwest Projects Office in Richland. Washington. The Northwest Projects Office provides Regional representation of Quad-rex Corporatoris imx1 tused engineenng sene ices in the Pacific Northwest. Robert Mussel-man has two appointed manager of office ogw atrons. Jay Pride has t>et ti named to handle account executive octuities for Richland Services Division.
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CONSOUDATED EARNINGS _ Ouarter Ended Januasy 31 * (unaudited) 1981 '1980 - Revernws Sl 7,005.for 5 7.975.orn Costs armt 1.ng= nws 14.145 0iG 66SJpo laworm lirfore lancs 2.H60fMO l_122.000 Prowsuin los Irwome lanes 1,44H n) _ (41.000 - Net incorne 5 1,4 I l .000 5
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Net Irwome pes Share 5_. .. _ __ .4 5 5 __ 22 Year Ended January 31 1981 1980
- Revenues 552.800.000 523.108.000 Costs arat Espenses ,442 1_07000
. 18.675.000 income Before Tames 8.693.000 ~ 4.433.000 Prowsum for income Tames _4J10.000 2.210J00 Net Irworm 5.4.281000 5_L221000 Net income per Share 5 1.37 5 .75 Number of Shares Used in Computatson of Net -
krome per Share 3,130,753 2.982.993
TO OUR SHAREHOLDERS: Quadrex Corporation's Fourth Quarter revenues reached a record high of $17,005,000 compared to $7.975,000 for the Fourth Quarter oflast year. Af ter tax eamings for the quarter were also a record high - $ 1,4 l 1,000, compared to $661,000 for the same period last year. Earnings per share were 45C compared to 22C for the Fourth Quarter of last year. For the fiscal year ended January 31,1981, revenues were a record . high $52,800,000, an increase of 128% over the $23,108,000 recorded for the previous year. Net income reached a record high level of S4 ,283,000, up 93% over last year's $2,223,000. Earnings per share for the past fiscal year were St.37, compared to 75C for the prior year. These results exceeded, for the second straight year, the Company's ambitious growth objectives. Our business plans have called for an average annual growth of 35%-and for the second year, we have doubled. While the growth of the past two years cannot be sustained, we have no reason to doubt our ability to meet our 35% growth objective. The Board of Directors approved a Fourth Quarter cash dividend of 7C per share payable on April 10,1981, to shareholders of record on March 13, 1981. This brings the yearly dividend to 24C per share, representing a 60% increase over the 15C paid last year.
- ) tamal Sherman Naymark President Campbell. .Califomia April 10,1981
RECORDS SETIN REVENUES, EARNINGS, ORDERS and BACKLOG Ouadrex Corporation once again saw fiscal year 1981 as a record year in all respects. As reported herein, revenues, net income and earnings per share were at all time high levels. Orders received for the year were
$65,600,000 compared to $29,500,000 for the previous year-an increase of 122%. The Company entered the current year with a backlog of $48.3 million, up .
130% over the $21 million in backlog at the end of the previous year.The backlog results in a high level of work in engineer-ing, operations, piping and the other specialized business areas the Company
! is involved in.
This expansion has resulted in a growth in the number of employees.The number of employees at the end of the fiscal year stood at 906 compared to 538 one year ago. y 1
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Corporate Offices 1700 Den Avenue Campben.Cahtorrua 95006 (408)866-4510 Quadrez internellonel (whonyOwned Subsdary) - 1700 Dell Avenue Csnpbell.Cah!orrua 95008 i (408)866-4510 Health Physice Systems, lac. (WhonyOwned Subsdary) 2727 NW 43rd Street GainesviNe, Flonda 32601 (904)373-6066 Novedeinspection Services,Inc. (WhollyOwned Subsdary) 1700 DeH Averw4e CampbeII.Cahfornia 95006 (408)866-4510 j Nucieer Services Corporation (whonyOwned subsdary)
- 1700 Delt AveruJe
- Campben Califorrua95008
- (408)866-4510 Richtend Services Divlelon a evision of Guadrea Coeposat un 2952 George WashingtonWay R chland. Wastungton 99352 (509)375-4198 4
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QUADREXCORPORATION Boardof Directors arrJ ExecutiveOfficers Sherman Naymark Quadrex Corporationi Annual 5 hare-President and Director of the Company holders' Meeting will be held on June 10. Thomas J. Pashos 1980 at 2 PM.at the Corporate Head. Senior Vice PresidenI and Director of quaners building.1700 Dell Avenue, the Company Campbell C:lifornia. John W. Lingafelter The Company will furnish, without charge. Senior Vice President and Director of a copy of the annual repon on Form 10 K, ihe Company to be filed with the Securities and Ex-Jule s Pearlman change Commission for the fiscal yea r Director ofIhe Company. Panner in Ihe ended January 31,1980. A copy of any ex-hibit to such annuai repon will be provided law firm of Pearlman & Bose. Campbell, California r a fee limited to the Company) expense in furnishing the same. Copies will be ft.r. Ronald L.Naymark nished on written request to the Secretary Director and Employee of the Company of the Compa ny at its corporate offices. Gxrge J. Lyon 1700 Dell Avenue. Campbell, California Investment Banker. Director of the 95008. Company. Principal. Moore.Juran and Compa ny. Inc. C. Lee Karns Bu> messman. Director of the Company. Presidem of Comprehensive Care Corpora:lon, a health care management cnmpany g'he , f William R.Moffat d'e g Director of t!.c Compa ny. Vice President . - /g [g Corporate Development.Natomas n J// Company, a diversified energy and h & tramponation company. d' E Robert H. Dempsey % Senior Vice President of the Company [ [ J siph F.Cerny Secretary and Treasurer of the Company g-E &
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TOOUR SHAREHOLDERS: Historians may describe the 1970s And then comes the final energy di-as the decade of " inferred abundance.- lemma which is that nature put most of Mankind believed that technology and sci- our energy resources in areas w hi(h do not ence would solve every problem facing us. have the greatest contentrations of people. In no area was it more true than energy... As a result, the populous nations must go to Oil and gas would provide about three- the agrarian and developing world to scri fourths of the world's energy needs... Coal precious oil and gas. The result is the polin. would be made environmentally accept- cal trauma and instability that we are just j ,.@"
,{. M able and help augment our needs.. . And the beginning to witness - a trauma which
/ .,.- i .. }',. l use of nuclear energy would rise dramati- may well shape world history in the next
- # v. j *, cally, providing cheap and abundant elec- decade. And as we look ahead to a nesy
$4, tricity to fuel a world whose annual in- decade, during which energy availability I crease in electrical generation was about will be a critical problem, the need to help twice that of total energy usage. As the dec- the energy industry provide needed elec-ade evolved, the illusion of abundance- tricity will be a major responsibility.
.s, ,5 turned to delusion. Our Company. Quadrex Corpora-We learned that the flow of oil and tion. serves the elettric uti:ity industry in
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gas was not endless. In our lifetimes, and the United States and around the world (d.;$ ' ,,;,-Q... d 8 those of our children, we can now see the w th high technology engineering services. Ky.'., . I time when there will not be adequate it has been ten years since our Company
$ gd,.S ' [p , j , l-.W.' .-J economcally retrievable supplies of oil and was founded and dunng that time we h3E
.j.I g MQS'y gas to prc, vide the major segment of our assumed a position as an industry leader g -\ y energy needs. The technology required t w th most of our work in the development
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. / easily mine the "hard to get oil and gas ~
from deep within the earth or under the of nuclear power. This source of energy now supplies approsimately one seventh g - d g(. % e ", g oceans is not readily available and will be very costly. The cleanup of coal is difficult, of our countre electricity. In the ne.st
;/ 5 g decade thete is httle question that up to
Riyf}jN- - Q ( . ,*T , .-J* y expensive, and not as effective as environ- three times as much elettncity will be gen-mental purists will demand. Nuclear
.y,6:j.y':. Q crated by nucicar power in the United
.h.,."., ; ,.,* ' power, whose generation costs are less States than is now being generated.
'Jf% . than coal or oil, has high capital require-Quadrex has grown in the nuclear l 8"**%=h d M M dd n % ments. And some of the public still have a
_j phobia against nuc! car fanned by the mis- industry. And we will continue to grow not naly as a nuclear technology and engineer-l 5,,,,,,,$((,[ taken concept that the nuclear power that ing company. but as a Company espanding
% i-e m e.ce-cry generates electricity is somehow related to the mushroom cloud over Hiroshima. into the other phases of energy generation such as fossil, and in the more advanced Add to this dilemma of energy re-areas of breeders. fu> ion. coal gasification source limits the problem of a continually growing demand for energy, caused by and liquefication. solar. and energy population increases and per capita in- C "5*J 'iO"-
! crease in energy usage in the world: This annual report nill provide you a The world population in 1900 was with the following infonnation; about 1.6 billion people. Just 80 . The story of our growth during the short years later, it is 4 billion, and first decade, by the end of this century it will ex-ceed 6 billion.
- The details of this past year during which revenues espanded by 72c'c
- Our instant worldwide communi-and earnings grew by IW~. e cations system has caused the ex-pectations of each of these people to want - and demand - as much of life's fortunes as his neighbor. And one of the greatest fortunes is abun-2 dant energy.
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- And finally. suggestions on how we F~---~-'-'~~~~-- [
as citizens must come to understand T,,r m;-TSc3y the technology, the economics, the . 3~ {PD'M $,' politic . and the effects on our life.
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style and society caused by our na-tionalenergy policy . or lack of such a policy; and what we. as citizens of 93 "ig ja the world must do to ensure that the g.g . ' *: se energ> needed to meet our needs -, s . .... , 4 1 will be asailable for us and those k,ii*k,
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THE PASTTEN YEARS Your Company celebrated its 10th By the mid 1970s nuclear power anniversary in business this past year. We originally incorporated as Nuclear Services came under increasing pressure and public
, scrutiny. A vocal, but effective minonty of Corporation (NSC) in December.1969. By people succeeded, through ballot mea January of 1970, we undertook our first sures. political action, court challenges and work on behalf of clients. The Company demonstrations. in bringing new nuclear was founded by Sherman Naymark. plant orders to a standstill by the end of the
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. l Thomas Pashos. and Jack 1.ingafelter to decade. This occurred in spite of the fact
! i provide the engineering and technical ser- that none of the publicly tested plan:
T ! vices needed by a growing nuclear power moratorium referendums passed and tha: b industry. Since its inception, the Company public opinion polls retiected support o:
- has built and maintained a reputation of nuclear energy by two-thirds of the peopic A technical excellence as a leader in the nu- of the United States.
# ' ' clear industry. The client list presented in By the late 1970s. the industry was
,. . s this report is a broad based and diversified plagued by political and regulatory uncer I -
group who have come to know. respect, tainty and, as a result. available work had and trust our capability. decreased for companies like ours. We be
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- NSC initially provided services from lieved that nuclear power was here to sta) i its office in Campbell and was often called and that our nation's nuclear prograrr.
' p ,jM h upon to provide personnel at plant sites l across the country. In response to a de-would once again get on track. We spem most of the decade developing a compe i r
- _: . \h mand for our work abroad, we formed Nu- tent. highly qualified staff and decided tc
'" clear Services International Corporation retain our key people during this period o:
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I services in the Mid West and Eastern turn would ensue. 3- q./ : United States, NSC established its first re-9./
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J' g [j - in 1978. By 1979, the Company's clients in the southern United States required .F 4 the support of a regional office in 1bisa. ,
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I we realized the need to reassess the direc- We survived the ups-and downs of a new
. ton .if the Company. This reassessment industry constantly under vigilant public I *s howed that by the end of the 1990s. even scrutiny. We built a competent staff dedi- 1 without the ordening of any new plants, there would be nearly 150 operating nu-cated to terhnical excellence. We invested in facilities and expanded consistently j
1 f y / clear plants in the United States plus a with our growth plans. We developed l p""- sornen hat larger nuinber around the engmeering tools such as our proprietary a i' , world. We decided to emphasize opera- computer programs which are used by us and our licensees in solving industry prob-fag ; tional plant' >ervices, plant maintenance , programs. modification engineering. and lems around the world. And we solidified a ' other services that would keep these plants client base which includes most of those
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, having expected operating lives of at least who have been our clients since we first opened our doors a decade ago. We are j
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lv The year ended January 31,1980, The Company management er
' was a record year in many respects for your tered the year of this report optimisticall Company. Revenues, earnings, orders re. We knew that the backlog generated by th q high level of orders in the prior year wou!
/ ceived and backlog were at all-time high
- levels for Quadrex Corporation. support our staff sufficiently to generat '
E I increased revenues and earnings consi f'
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y gr i from last yeari 513.409.000-an in-crease of 727c.
- Income from operations was of attaining a 357c average annual growt.
to meet our new five. year plan. Our marketing effon resulted in a
/ $2.223.000, up from 5871.000 for I dhhe the preceeding year- an increase I 's take a major recruiting effort in order t l
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- Earnings per share from operations meet client commitments. By the end c !
, j.?. were $1.12, up from last year's 44' the fiscal year. our staff had grown t l 3 f l - an increase of 1557c. nearly 500, up from 250 at the beginnin 1
L M' s3 + Dividends per share were increased of the year. Management was determine
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i from 5' to 6' per share for the Sec. ond and Third Quarters. Dividends to prevent a permanent staff burde caused by this rapid expansion and so w P M** had been raised in the previous utilized a number of contract professional NO ;-
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compared to $18.000.000 one year This increased activity generated need for additional facilities. In Septembe j
- war .y ,l ago-an increase of 647c. the Company leased 15.000 square feet c l' p.g$.$
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+ Backlog at the end of January 1980, additional space adjacent to our headqua was $21,000.000 compared to ters in Campbell California. In late 19P
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crease of I167c. nent addition to our headquaners which i J ' f The Board of Directors declared a 3 scheduled for completion in mid-1980. A for 2 stock split for the Fourth Quaner.The the same time, we expanded our regionz I quanerly cash dividend. reduced from 6' 7 offices in Pittsburgh and nilsa. ' e to 5' pc @are, represented a 257c divi-U The Company's engineering orgar 44 e' /
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den 1 case as it was based on shares Wr 2 effdtive date of the stock split. ization was involved in most technical di:
ciplines this past year. We expanded th- _ e
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,. people and provides for the analysis of Our work in improving the fire pro- As part of our efforts to improve g large plant piping systems, and the design tection capability of plants, improving plant safen and respnse to emergency . of pipe supports and related hardware so waste management systems. In computer situations, we announced the development that the systems can sustain large stresses technology, developing .nore effective of a new concept in power plant simulation i . due to earthquakes and other accident techniques for thermal hydraulics analysis - the Operational Safety Simulator -
. conditions as well as those due to normal of systems. and in other engineering disci- which had been solely under development
. operating conditions. plines resulted in high application of the at Quadrex. We then formed a team com-Company's engineering personnel. prised of Quadrex.the Link Division of the I This particulas effort also requires Singer Company, and the Boeing Company the use of the computer as an analytical Our operations and projects organ. ization was also heavily involved in many in proposing this advanced approach to i tool. The Company's proprietary NUPIPEs service areas during the past year. Efforts clients.
. computer code is used to calculate piping . stress not only by us, but by many other in plant startup assistance, improving In 1979. the Company began to im-
, engineering finns throughout the world maintenance programs, diversifying qual- plement its plans to further diversify our using our codes on a royalty basis. The ity assurance. and other services continued services. The first step was the acquisition Company purchased an in house com- for our clients through our regional offices of Health Physics Systems. Inc. (HPS) of
- puter last year and much of our work on and at various plant sites. We also ex- Gainesville. Florida.
these and other engineenng problems are panded our data management. emergency HPS serves the nuclear industry run on this computer. planning, and other plant operating ser- with technical and operational services vices capabilities. In radioactive decontaminaticn'decom-Our first commercial nuclear reac-tor Core Monitoring System was sold this It was also a yearin which our opera- missioning. radwaste reduction, radiologic past year Developed under a base contract tions and projects groups began expansion health testing and health physics training. from the Electric Power Research Institute, into new business areas which have a high A relatively young company by industry this system provides plant operators with potential for the future. Many of these ser- standards. HPS has already spearheaded a more information on plant and fuel core vices have been under consideration and number of innovative technologies in the status. The Company expanded this pro- development at Quadrex for some time and nuclear marketplace. gram to commercial applications with its are now recognized as essential by the in- -~ ~ own funds. We expect this business area to dustry as a result of the investigatory studies i, expand as utilities recognize the need to following the Three Mile Island incident. L have more criticalinformation available in Our operations training group has i ..: - the control room of operating plants. ' been advocating an improved approach to " U)". We developed a new design for a plant operator training centered around . Pressurized Water Reactor (PWR) spent the development of new curriculums. qual- l c 'e fuel storage rack using special materials to ified instructors, greatly emphasized re- i improve storage volume, and also a concep- training requirements. and the use of
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tual design for a new Boiling Water Reactor simulators specific to each plant. $ .D. (BWR) spent fuel storage rack. These de- __ ) { .WJ signs represent major advances over some
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THE PASTYEAR . .. , , This acquisition was a central part NSIC re established its consultant Extending beyond f< mil power of the Company's plan to enter the decon- position in Mexico this past year when the facilities, we began participating in other tamination and decommissioning business Company negotiated a contract with Com- areas of energy development. Our role as implemented by our operations and proi- ision Federal de Electricidad (the national the prime technical subcontractor to the ects group. The products and services of- utility of Mexico) to provide assistance to Boeing Company in studying and analyz-fered by HPS and Quadrex will also be of their operating plant staff in preparation ing aspects of the nation's breeder reactor assistance as the industry prepares for the for operation of their first nuclear plant. program for the United States Department decommissioning of older plants. Along NSIC obtained its first work in canada this of Energy prmMes a basis for continued with our well established market accep- past year. participation in the breeder reactor pro-tance the new combination of technical gram, Quadrex established a fossil power and services capabilities offered by HPS plant services marketing program which During 1979, the nuclear industry and Quadres .T.2ans c wl!! present : f=' extends our services in plant startup, oper- once again came under public scrutiny - midable team for improving market pene* ations, maintenance. computer technol- perhaps more so than ever- following the tration in this area. ogy and related services to fossil fueled accident at the Three Mile Island Nuclear Our effort abroad. through Nuclear plants.The Company is currently providing Power Plant. Despite the fact that nobody services for coal plants and the marketing was killed or injured. the clamor of a vocal Serdces Intemational Corporation (NSIC), involved clients in Europe. Asia, Mexico, program is designed to expand those ser- minority placed the industry under the mi-and Canada In Europe, the first half of the vices to comprise an ever increasing share croscope of the public eye. The industry re-of Quadrex's total orders and revenues. sponded by establishing new ini:iatives in year saw a continuation of their stagnant plant safety and operator training to further nuc!c.c power program. By the end of the Looking to other areas the Com. reduce the likelihood of such an accident. year. NS!C increased its European activity pany's Business Development organization and obtained orders in computer code sales has implem""ed joint ventures with and piping analysis. Orders in Asia were Pittsburgh De. Etoines Steel Co. (PDM), to above those oflast year.The nuclear power develop business opportunities combining , n program in Asia is growing rapidly and our engineering services with PDM's
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l l l As a result of the Three Mile Island All this has been accomplished as a accident. new regulations will be placed on result of aggressive planning. We have built the industry to develop new systems for a strong client base. a reputation for tech-providing information to operators to add nical excellence and we have a manage-further system redundancies, and to im- ment / technical team in place capable of , prove operator training. As we have al- responding to the needs of the industry in i -_ l ready indicated, we have been developing which we operate. __.,, f " %" i new a nd innovative ideas in these areas and Our Company's success can be di-l intend to remain a leader in industry re-
'* * -1D,'5 rectly attributed to the efforts ofour highly ,
sponse to these problems. dedicated employees in all areas from T y., ) In summary. the past year was technical and engineering to marketing. marked by significant accomplishments in administration, and support. It is their per- ! .. e many areas: formance which allows the Company to l
- We continued to provide highly gr w. They have met management's chal- l. ,).
J ', $ lenges with hard work. innovation, and an j- % , technical engineering and plant ser- *- eagerness to be a part of a growing Com- g ., ,, vices to a solid client base in the pany. Just as we are proud of their past .g
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u 9, . ENERGY POUCY Perhaps the most critical problem Due to the king lead times necessary affecting our security and the political, so- to design. license, and build plants it may cial and economic stability of tite world is already be too late to prevent the problems energy. Your Company is deeply involved associated with an insecure world oil sup-
. , . . . In the energy field, and believes it our cor- ply and little contml on prices from affect-
/ --- s. - - -J ' porate social responsibility to speak out on ing our supply of electricity. And if our
/ UFNiM" this issue. We hope to motivate our share- supply of electricity becomes inadequate to
< 2 M- D*$ holders and others to join us in urging ac- meet our needs. the result will be social and
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economic changes in our lifestyle that our citizens may not accept. The United States first exposed its [{Nh - k'h] y vulnerability in energy during the early Countless studies have pomted out that, in spite of conservation efforts, the
. M M ^-'* , ._ ;,-d.Q_ 1970s when price and production varia- demand for energy will outstrip supply in
#~EM.E . E ~~6 tions hit hard in households around our the next decade. Our electrical reserve W "W]
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*4 country. A succession of presidents and political and industrial leaders spoke out margins will dwindle as plants schedu!cd to come on line are further delayed. In 1979
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forge a comprehensive energy policy. the net result was that the United States still 41 nuclear power plants by a total of 835 months. A[ST"" .S'($ K had no effec:ive energy policy by the end , kdi 4 ,I of the decade' It became apparent that it was more w th enerj;y statistics. Some say we have enough energy to meet our needs and
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politically palatable for our national state, others disagree. But we believe that if we g '- ** h g ) g u -7 ' and local governmental bodies to either are to err it should be on the side of over-q\ yh. %Qs %
, say "no" to new energy facilities or simply capacity. We have seen that not having
,t M ,Q " . , - say nothing. Not only had our planning for enough energy can bring financial. eco-y3 'gg.3hr F
- new nuclear electric generating facilities nomic. political, and social chaos through-d h ,d'S - -
5d come to a halt, so had our plannir g for out our country and the world. M y'. most other energy facilities. As a result, the Stany of those who oppose the in-(i.?,*y'@ 9-/.K ' . ' - gp3p day will come when the United States will run out of electrical energy to light our creased development of available energy resources such as nudear. do so not be-homes, run our appliances, move our as- a idar b of
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*f.c V3%y(7 h hh. pg sembly lines. and fuel our industrial plants unless action is taken soon.
energy. iThe actual nsks awociated with __ , , nuclear generated power so far have been A recent study by the General Ac- less than those associated with coal gener-l counting Office concluded that "if actions ated power and most other ferns of
- are taken to limit or halt the growth of nu- energy). Stany of those who have brought clear power, they must be accompanied by a halt to new energy facilities have another actions to severely limit electrical re- goal- that of changing the fundamental quirements. . .Otherwise, serious shortfalls direction of our society.
of electricity supply are likely to occur They seek economic. social, and cul-within the next 5 to 10 years." tural change. They want to cui economic and industrial expansion. The reason they oppose nuclear or coal is because energy fuels society and if the supply can be re-duced or severed. growth nill be slowed cr halted. Some people call for abandoning 10
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our present energy sources and replacing Your Company is concerned that them with new " soft" sources such as solar. those who are shaping our energy policy biomass. and others- only because we do do not fully understand the consequences not have the>e technologies available. of their inaction. We can solve the techni-When they are available, they will al>o cal problems that remain if we have the have their own problems of cost. environ- will and determination to act. mentillmpact.and risk. At that time.those We hope that you, as shareholders who now oppose energy expansion may of an energy company and as American well oppose these new forms with the same and world citizens. are as concerned as we vigor. are about this crisis. We hope you will join
..We must be cognizant that America us in our advocacy efforts. We suggest you burns vast amounts of oil- so preciously begin by writing your representatives in needed for transportation and home heat- the House and Senate. the Secretary of ing - to produce electricity. In New Eriergy. state leaders. a nd the President.Tell England alone, over half of the electricity is them how important you feel energy inde-generated by burning 165 million barrels pendence is to America and urge them to of oil per gear. If the United States were to take .those steps necessary to make our utilize the nuclear and coal resources avail- energy options available to us.
able to us, we could divert this oil to more Our failure to respond to this crisis prening need> or we sou;d ieduce our de- as a nation could mean a gradual, but cer-pendence on foreign oil. One large 1000 tain end to the quality oflife as we know it. MWe nuclear plant alone will provide We owe an adequacy of energy to our chil-enough replacement energy to make dren and to the coming generations who gamline available for 500.000 automobiles w 11 nherit what we leave them or who each and every day of the year. w 11 suffer for that which we fail to provide. Our national leaders must realize The future depends on what we do today. that the United States needs to rely on Please join us in this effort. those sources of energy which help us meet our need for electricity and at the same time. reduce our dependence on foreign oil. These sources, for now, are coal and nu-
. clear. We beliese that the United States should continue to develop alternative energy sounes so that. in the future, new developments will broaden this base. How- - ever, with the long lead times required to design and build such facilities, time is wasting.Our leaders must reject the claims of those who call for the shutdown of nu-clear or other proven. safe. and viable energy sources, il
?. ,/ THE FUTURE
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9 ' i . Examine appropriate ways of par-f . 3..- .;W ticipating in new initiatises in e....i'v.,yq d... .L ,, breeder reactors. fusion, synthetic 3 H M ? M f.t.*4' p y$d% m..;. ~4 . . M s., h M L, R, W. ..56Wb fuels, engineered conservation. and D E O r 3 4 E "A - 4' eddJ5S:.A2N , other emerging a1ternatise energy i - - - producing or energy conserving Your Company has just closed a technologies. year of significant growtn - one of which The acquisition of Health Physics we are deservedly proud. Over a year ago. Systems. Inc. marked a milestone in our we established a five year plan which expansion program. Management is cur-targeted an average annual growth rate of rently studying ways in which we can 359c' . In the first year of that plan which we enter other areas through acquisitions. have just completed, we far exceeded this jo nt ventures. or other arrarx' ements. We objective. We believe that we are well posi-intend to be aggressive as we look ahead. tioned to meet our ob lective for next year due to the high level of orders received this We are prepared to move the Com-past year and the backlog resuhing from pany into a second decade of expansion. As l these orders. we move to the Eighties and beyond. we l know there will be challenges for our As we enter the 1980s, we find that Company. brought on by the need to the United States is still without a defini-i & of h wedd's tive energy policy that will reduce our de- limited energy resources. We are prepared pendence on foreign oil. As an energy ;; ,_ technology company, we are preparing for broad based participation in this field. Specifically, we plan to:
- Capitalize on our strong engineer-ing and technical services to the nu-clear industry as we expand our services to operating nuclear power plants.
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aimens c.p uuan ens om.i===y si toes mis vers Consolidated Balance Sheets c p,m 1900 1979 ASSETS Current Assets - Cash and cash investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : $ 4,069 3 3,558 investmentsin common stocks,at
, cost wtWch approximates market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247 -
Dade receivables, not of reserve of $216 in 1960 and $ 120 in 1979 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,466 3,558 , inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 - Employee advances and prepaid expenses . . . . . . . . . . . . . . . . . . . . . . 287 362 Total cupent assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,132 7.478 Property and Equipment, at cost (Note 2) Building and impnaments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,189 2.180 Land and land improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375 375 Vehicles and decontamination equipment . . . . . . . . . . . . . . . . . . . . . . . . 571 56 Office fumiture and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,306 830 Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 - 4,564 3,441 Accumulated depreciation and amortization . . . . . . . . . , . . . . . . . . . . . . __ (982) (833) 3,582 2,608 Cash Surrender Value of Life Insurance Policles (Note 3) . . . . . . . . 437 333 Cost in Excess of Not Assets Acquired (Note 9) ................ 752 -
$15,903 $10,419 UABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 124 $ -
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 19 Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 652 197 Accrued compensation and other expenses . . . . . . . . . . . . . . . . . . . . . . 981 496 Accrued income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 634 - Deferred income taxes (Note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,916 1,947 Total current liabirrties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,379 2,659 Long Term Debt (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.275 1.196 Commitments (Notes 3 and 7) Shareholders' Equity (Notes 3,4,8 and 9) Common stock, authorized 5,000,000 shares; outstanding 3,039,453 and 2,858,872 shares, respectively, stated at . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,339 1,455 Retained eamings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,910 5,109 Total shareholders' equity . . . . . . . . . . . . . . . . . . . ; . . .. . . . . . . . . . . . . . 9,249 6,564
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ommeem corporenen uw simeneste. .iermary si.isso sw sors Conso8deted Statements ofIncome tu thousands, encept per sham anowne) 1980 1979 Net Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 323,108 $13.409 Cocts and Exponess Direct cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,487 9,735 Marketing and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 2,319 1,885 Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240 198 Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 117 f Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (480) (289) Ig , 18,875 11,646 Income Before income 1kxes and Extraordinary Credit . . . . . . . . . . 4,433 1,763 Provision for locome 'ikxes (Note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,210 892 income Before Extraordinary Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.223 871 Extraordinary Credit - Ufe Insurance Proceeds (Note 3) . . . . . . . . - 709 Not income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2.223 $ 1,580 Notincome Per Share (Note 8) Before Extraordinary Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ .75 5 .29 Extraortinary Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - .24 8 .75 $ .53 Consolidated Statements of Shareholders' Equity (M thousands, except shares) j Common Stock D Share-Number Retained holders' of Shares Amount Earnings Equity Balance, January 31,1978 . . . . . . . . . 2,875,119 $1,398 $3,959 $5,357 Net income for the year . . . . . . . . . . . . . - - 1,580 1,580 7.xercise of options under: Employee stock purchase plan .. 1,845 4 - 4 Nonstatutory stock option plan .. 19,408 53 - 53 Cash dividends, $.11 per share . . . . . . - - (308) (308) Repurchase of shares from shareholdert estate pursuant to Stock Redemption A9reement (Note 3) . . . . . . . . . . . . (37.500) - (122) (122) v N Balance, January 31,1979 . . . . . . . . . 2,858,872 1,455 5,109 6,564 j 'g Net income for the year . . . . . . . . . . . . . - - 2,223 2,223
. Sharesissued for acquisition l of HPS (Note 9) . . . . . . . . . . . . . . . 133,942 759 - 759 Exercise of options under: '
Employee stock purchase plan .. 13,181 33 - 33 Nonstatutory stock option plan .. 33,478 92 - 92 l Cash dividends, $.15 per share . . . . . . - - (422) (422) l Balance, January 31,1980 . . . . . . . . . 3,039,453 $2.339 $6,910 $9.249 u rhe acconveyev nonw es m mregru9 err of mese aamwns,a
. . - - - - , - , . - . - , - _ . ~ , , . _ . , - , , , , . - , - - - , - . - - , . . - . -
ommemcorp m nenesue.wan annus,ysi. sees wwie Conso5 dated Statements of Changes in Financial Position flh sousemss) 1900 - 1979 Wortdng CapitalWas Pnwided By Operations- 42,223 8 871 Inmme before extraordinary credt . . . . . . . . . . . . . . . . . . . . . . . . . . 240 198 Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- Increasein cash surrendervalue of 1
life insurance policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (104) (56) 2,359 1,013 VWxtong capital provided by operations . . . . . . . . . . . . . . . . . . . . . . . . . .
- 709 Extraordinary credit -life insurance proceeds . . . . . . . . . . . . . . . . . . . .
1 125 57 l Exercise of stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Value of common shares issued for acquisition of HPS . . . . . . . . . . . . . 759 - 3,243 1,779 Working CapitalWas Used For 422 308 Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 678 140 Aoditions to property, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 19 Reduction in iong-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 122 Repurchase of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of HPS (exclusive of working capital at date of acquisition)- 536 - Equipment and fumiture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - t.ong-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (100) l Excess of cost mer net assets acquired . . . . . . . . . . . . . . . . . . . . . . 752 - [ 2,309 589 S 934 $1.190 INCREASE IN WORKING CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . Incrosse In Working Capital Represented By increase (decrease) in current assets - $ 320 Cash and cash investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S 501 247 - Investments in common stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210 2,908 Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 - inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148 Employee advances and prepaid expenses . . . . . . . . . . . . . . . . . . (75) . 3,654 678 (Increase) decrease in current liabilities - - Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (124) (53) (2) Cunent portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4ss) (485) (30) Accrued compensation and other expenses . . . . . . . . . . . . . . . . . . Income taxes- 750 Currently payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (634) ! (9ss) (244) oefened . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,720) 512 l l S 934 $1,190 INCREASE IN WORKING CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . m .rhe accornpanywag norme se an kstogralput of these statemennu
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c :1 .3 oue*== caryssenen aw eisennets. Jamary ss.ises sus wie Notes to Conso5 dated Financial Statements
- 1. Summary of Significant Accounting Policies Principles of Consolidation The financial statements include the accounts of the Company and its wholly owned subsidaries after elimination of intermmpany accounts and transactions.
Depreciation and Amortization .. The Company provides depreciation on property and equipment over their estimated usefullives using the straight-line method for financial reporting purposes, in fiscal 1980, the Company changed the estimated useful Rves assigned to the building and certain improvements. This change had no signifi-cant effect on these financial statements. Depreciation and amorteation have been computed using the followinglives:
. CLASSlFICATION UFE IN YEARS Building and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 40 Land improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 40 Equipment, office fumiture and vehicles . . . . . . . . . . . . . . . . . . 3-10 Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . .Ufe of lease Maintenance and repairs are charged to expense as incurred. The cost of renewals or bet-terments that increase the useful Efe of the property is capitalized.
The net gain or loss on propstty and equipment sold or otherwise retired is included in costs and expenses and the asset cost and related accu nulated depreciation are removed from the accounts. Income Taxes i Federal and state income tax retums are filed on the cash basis. Deferred income taxes haw been
. provided in the accompanying financial statements to recognize timing differences in reporting certain income and expense items in the tax retoms from those reported in the financial statements. Income taxes are provided on total income of the Companyt DISC subsidiary and investment tax credrts are accounted for on the flow through method, Net Revenues and Segment Information During fiscal 1980 and 1979, the Companyt only line of business was providing consulting and related services in the field of energy engineering.
Net revenues include billings for services plus out-of-pocket expenses. Flevenues are recog-nized at the time such services are rendered. Revenues include $1,961,000 in 1980 and $1,779,000 in 1979 from non-U.S. customers. 1 In 1980, three customers each accounted for more than 10% of net rewnues ($4,242,000, l $3,037,000 and $2,385,000, respectively). In 1979, two customers each accounted for more than 10% of not revenues ($3,202,000 and $1,746,000, respectively). Insurcnce Coverage The Company provides services related to the use of nuclear energy. Federallaw provides a systo,n of insurance protection and indemnification related to such activity and :ts provisions are set forth in the Atomic Energy Act of 1954, as amended. Consequently, the Company does not maintain any private
) insurance covering the unique liabilities assor'iated with the work done for nuclear power plants.
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- 2. Long-Thrm Debt Long-term debt consists of the following (in thousands):
1980 1979 9%% notes payable to a bank, secured by the headquarters building, due in equal monthly installments of $11,000, includng interest, through the year 2000 . . . . . . . . . . . . . $1,196 $1,215 Installment loans payable by HPS, at interest rates ranging hem 10% to 17.6%, secured by certain equipment, due at various dates through November 1983 . . . . . . . . . . . . . . . . . . . 151 - 1,347 1,215 Less current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (72) (19)
$1,275 $1,196 The principal amounts payable on long-term debt are (in thousands):
YEAR ENDING JANUARY 31 AMOUNT 1981 ................................................ $ 72 1982 ................................................ 82 1^83................................................ 67 19tA ............................................. 28 1985 .... ........................................... 31 1986 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,067
$1,347
- 3. Dansactions With Related Parties The three majority shareholder / officers have agreements with the Company providing, in the event of the death of any of the shareholder / officers, annual benefits in the amount of $8,830, $4,740 and $2,840 per shareholder / officer payable for ten years to beneficiaries namod by the shareholder / officer. As of January 31,1980, the Company had insurance on the lives of the shareholder / officers in the amounts of
$154,000, $97,000 and $70,000, which may be used to discharge the Company 4 obligations for the death benefits. .
The Company has entered into stock redemption agreements with each of its six principal shareholders (the three shareholder / officers, two of their wives and a director). Pursuant to each agreement. the Company must maintain $750,000 of life insurance on each of these shareholders, with the proceeds to be used to redeem shares of common stock includable in the insuredt estate for Federal estate tax purposes. Redemption is mandatory on the death of any of the males or a wife who survives her husband. in these cases, the redemption price is 95% of the fair market value on the date of death. lf any of the wives predeceases her husband, the estate has the option to cause the Company to redeem the shares at 95% of the fair market value on the date of death or the date of redemption (within six months after death), whichever is fess. The number of shares to be redeemed is limited by the amount of insurance obtained or the number which may be redeemed pursuant to section 303 of the Intemal Revenue Code, whichever is less. During fiscal 1979, the Company received net proceeds of $709,000 in excess of the cash [ surrender value from an insurance policy ccNering the wife of one of the shareholder / officers. Under the ; above agreement. the Company repurchased 25,000 shares of its corrmon stock from the wifeb estate , for a total cost of $122,000. ]
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- 4. Employee Stock Option and Stock Purchase Plana As of January 31,1980, the Company has 284,785 shares of comrnon stock reserved for issuance under two stock option plans (221,684) and a stock purchase plan (63,102). Under a quaEfied stock option plan, options may be granted at fair market value at the date of grant and are exercisable as determined by the Board of Directors. Options expire five years after the date of grant. Under a nonstatutory stock option plan, options to purchase common stock at approximately $.13 per share may be granted to certain employees. Options expire he years after date of grant and are exercisable as determined by the Board of Directors. There were 156,516 and 155,747 shares available for future grants under the above two plans as of January 31,1980 and 1979, respectively.
, Employees become eligible to participate in an Employee Stock Purchase Plan epon comple-tion of six months continuous service. Under the Plan, each eligible employee receives options to 5 purchase one share at 85% of the fair market value on the date of grant for each $*00 or fraction thereof of two times total compensation eamed by the employee during the six-month period preceding or nearest to the date on which the employee becomes eligible to participate. Options granted under the Plan are exercisable 50% after one year and the balance after two years from the grant date Options expire 27 months after the date of grant.There were 27,141 and 37,702 shares available for future grants under this Plan as of January 31,1980 and 1979, respectively.
The excess, if any, of the fair market value over the option price at the date of grant under the nonstatutory plan is accounted for as additional compensation and is accrued over the exercise period of the option. Such compensation amounts for fiscal 1980 and 1979 are included in the incentive'com-pensation amounts discussed in Note 6. Options Outstanding as of January 31,1980
%sr Number Fair MarketValue of of Option Price at Date of Grant Grant Shares Per Share Total Per Share Total StockOption Plans 1976 9,995 S.13-$3.83 $ 13,000 $2.66-$3.83 $ 31,000 1977 15,105 .13 2,000 2.54 38,000 1979 15,093 .13 2,000 2.92 44,000 1980 24,975 .13 4,000 2.25 56,000 65,168 $ 21,000 $169,000 Stock Purchase Plan 1978 732 $2.62-52.91 $ 2,000 $3.08-$3.42 $ 2,000 1979 14,511 1.84- 2.98 33,000 2.17- 3.50 39,000 1980 20,718 1.91- 7.23 100,000 2.25- 8.50 118.000 35,961 $135.000 $159.000
.s V 19
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Options Which Became Exerosable During the War Ended January 31 FairMarketValue Number at Date Became of Option Price Exercisable Shares PerShare 1btal PorShare Total 1900 StockOption Plans 30,663 $ .13 $ 4,000 $2.25-37.17 $104,000 i Stock Purchase Plan . 16,499 1.84-2.98 39,000 2.25- 8.50 83,000
. 47,162 $43,000 $187,000 1979 StockOption Plans 16:335 8 .13 $ 2,000 $2.25-$3.42 $ 50,000 Stock Purchase Plan 9,164 1.99-2.98 22.000 2.17- 3.50 26.000 25,499 $24,000 $ 76,000 Options Exercised During the War Ended January 31 Number FairMarketValue of Option Price at Date Exercised Shares Per Share 1btal PerShare Total 1980 StockOption Plans 33,478 $ .13 $ 5,000 $2.25-$9.09 $122.000 Stock Purchase Plan 13.161 1.84-2.98 33,000 4.33- 9.92 83.000 48,639 $38,000 $205,000 1979 StockOption Plans 19,408 $ .13 $ 3,000 $2.09-$3.75 $ 57,000 Stock Purchase Plan 1,845 1.99-2.98 4,000 2.92- 3.75 6,000 21.253 $ 7,000 $ 63.000
- 5. Income 1kmes The components of the J. wison forincome taxes are (in thousands):
' 1980 1979 Current: i Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 877 $435 State ................................................... 21 2 157 1,089 592 l Deferred: Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 928 270 l l State ................................................... 193 30 1 ' ! 1,121 300 i ! $2,210 $892 I N .- 3.. . [ ., _
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sq .y.q. . t The tax effect of timing dfferences in the recogrwbon of income and expense for tax and finanaal reporting purposes is as follows (in thousands): 1900 1979 Dfference between accruel and cash basis of accounting . . . . . . . . . . . S 986 $220 DISC income not cunently taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 53 l 79 27 other...................................................... l
- Sm $300 l
' The tax provisions differ from the amounts which would result by applying the ande=Ne statutory Federal income tax rate to income before income taxes. The reasons for these efferences are (in thousands): 1980 1979 (- 1. 82,020 $833 Tax at statutory rate, less surtax exemption . . . . . . . . . . . . . . . . . . . . . . . l State inmme taxes, not of Federal income tax benefit . . . . . . . . . . . . . . 216 83 (47) (61) Investmenttax credts ........................................ 37 21 other...................................................... l $2.210 $892 l f S. Incentive Comp.,C"-=. I The Board of Directors has authorized certain incentive compensation award payments for various employee groups. Amounts charged to operations for these awards were $710,000 in 1980 and
$317,000 in 1979, including $257,000 in 1980 to be awarded to certain officers and key management personnel
- 7. Proposed Building Addition The Board of Directors has authorized the expenditure of approximately $1 million to mnstruct an addtional office building adjacent to the existing office building. As of March 5,1980, no firm construc-tion commitment had been made.
S. Not income per Share and Common Stock Split i Net income per share has been computed based upon the weighted average number of common I shares (2,982,993 in 1980 and 2,959,809 in 1979) outstanding during the years, including the dilutive , .' effect of stock options, after giving retroactive effect to the stock split discussed below. Fully diluted net mcome per share is the same as reported not income per share. In March 1980, the Board of Directors authorized a 3-for-2 stock split payable April 21,1980, to shareholders of record on March 17,1980. The effect of this stock split has been retroactively reflected in
)
.. these financialstatements.
- 9. Acquisition of Health Physica Systems,Inc.
4 Effective January 15,1980, the Company acquired all the outstanding shares of Health Physics Sys-( tems, Inc. (HPS) in exchange for 133,942 shares of Quadrex common stock. HPS provides decontami-l -; nation, decommissioning, radiation waste reduction, health physics services and related training to the L .- nuclear power industry. The acquisition has been accounted for as a purchase transaction. The excess l i
$ l
., ($752.000) of the total market value of Quadrex shares issued over the fair value of the acquired will be amortized over twenty years using the straight-line method.
[ HPS reports results of operations using a December 31 year end.The acmmpanying consoli-6 t dated balance sheet as of January 31,1980. includes the ao:ounts of HPS as of December 31,1979, after l f
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I einwnation of intercompany accounts. The mTipariying statements of income do not include the results of operabons of HPS for any period. Unaudited pro forma mnsolidated results of operations for the years ended January 31,1980 and 1979, as though HPS had been acquwed as of February 1,1978, are: (in thousands, exceptpershare) 1980 1979 Net revenues $24,197 $14,205 income before extraordnary credit 1,828 942 Notincome 1,828 1,651 Notincome per share: Before extraordnary credit .59 .30 Netincome .59 .53 The above pro forma amounts reflect adjustments for the amortization of the cost in excess of not assets acquired and the effect of the Quadrex shares issued in the transaction.
- 10. Quarterly Financial lnformation (Unaudited)
(M mousands) 1980 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Net revenues . . . . . . . . . . . . . . . . . . . . . . . . . . $3,827 $4,889 $6,417 $7,975 Costs and expenses . . . . . . . . . . . . . . . . . . . . 3.087 3,942 4,993 6.653 Income before tax provision . . . . . . . . . . . . . . 740 947 1,424 1,322 l Provision for income taxes . . . . . . . . . . . . . . . 376 469 704 661 i Not income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 364 $ 478 $ 720 $ 661 Net income per share . . . . . . . . . . . . . . . . . . . $ .13 $ .16 $ .24 $ .22 l 1979 Net revenues . . . . . . . . . . . . . . . . . . . . . . . . . . $3,245 $3,379 $3,392 $3,393 l Costs and expenses . . . . . . . . . . . . . . . . . . . . 2.870 2,978 2.937 2.861 income before tax provision , and extraordinary credit . . . . . . . . . . . . . . 375 401 455 532 Provision for income taxes . . . . . . . . . . . . . . . 195 209 237 251 , income before extraordinary credit ........ 180 192 218 281 l Extraordinary credit . . . . . . . . . . . . . . . . . . . . . 709 - - - I Not inmme . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 889 $ 192 $ 218 $ 281 l Netincome per share: Before extraordinary credit . . . . . . . . . . . . . . $ .06 $ .07 $ .07 3 .09 Extraordinary credit . .. . . . . . . . . . . . . . . . . .24 - - -
$ .30 $ .07 $ .07 3 .09 l'-- - -
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L i l l ( REPORT OF INDEPENDENT PUBUC ACCOUNTANTS l To the Shareholders of l Quadrex Corporation: 1 i We have examined the consolidated balance sheets of Quadrex Corporation (a Califomsa corporation) and subsidiaries as of January 31,1980 and 1979, and the consolidated statements of l ; income, shareholders' equity and changes in financial position for the years then ended. Our examina-l t tions were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the financial statements referred to above present faltt/ the financial position of 3 Quadrex Corvration and subsidiaries as of January 31,1980 and 1979, and the results of their opera-tions anc' s.anges in their financia! position for the years then ended, in conformity with generalty accepted accounting principles applied on a consistent basis. l Arthur Andersen & Co. I' San Jose, Califomia. l March 5,1980. 1> t,. I b l b i I 'l l 23 l l l
ouse= carpermion ow subeMartes January 31,1300 and WF9 Summary of Operations For the Five Yners Ended January 31,1980 th moveance) 1976 1977 1978 1979 1980 l Not revenues (a) . . . . . . . . . . . . . . . . . . . . . . $10,144 $9,606 $12.919 $13,409 $23,106 Costs and expenses . . . . . . . . . . . . . . . . . . . 8,611 8,499 10,736 11,818 19,026 Interest expense . . . . . . . . . . . . . . . . . . . . . . 166 201 190 117 129 Interest income . . . . . . . . . . . . . . . . . . . . . . . (79) (130) (184) (289) (480) Income beforeincome taxes and extraordinary credit . . . . . . . . . . . . 1,446 1,036 2,177 1,763 4,433 Provision for income taxes . . . . . . . . . . . . . . 770 555 1,130 892 2,210 Income before extraordinary credit . . . . . . . 676 481 1,047 871 2.223 Extraordinary credit (c) . . . . . . . . . . . . . . . . . - - - 709 - Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 676 $ 481 $ 1,047 $ 1,580 $ 2,223 Netincome per share (b): Before extraordinary credit . . . . . . . . . . $ .23 $ .17 $ .35 $ .29 $ .75 Extraordinary credit . . . . . . . . . . . . . . . . - - - .24 -
$ .23 $ .17 $ .35 $ .53 $ .75 Cash dividends per share . . . . . . . . . . . . . . . $ .12 3 .07 $ .09 $ .11 $ .15 Note (a)
A substantial portion of revenues are from a limited number of customers. Total bi!!ings to the four '
' largest customers were 52%,48%,47%,46% and 43% of net re.enues for the five years ended January 31,1980, respectively Note (b)
Based on the weighted average number of common and common equivalent shares (2,863,433 in . 1976; 2,917,461 in 1977; 2,948,427 in 1978; 2,959,809 in 1979 and 2,982,993 in 1960) outstanding during the years, after giving retroactive effect for stock splits and stock dividends. Note (c) Proceeds from life insurance poGcy. See Note 3 to the consolidated financial statements. This summary should be read in conjunction with the consoGdated financial statements and related notes contained elsewhere in this annual report. 24
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t f r ! l-I - Stock Price and Otherinformation P The Companyt common stock is traded in the over-the-counter market. The following table shows the I reported low and high bid and asked prices and the dividends declared per share for the years ended t Ja: uary 31,1979 and 1980. [ Bid Prices Asked Prices Dividends f Period High Low High Low Paid (1) .
, Fiscal 1979 l
1 st Ouarter . . . . . . . . . . . . . . . . . . . . . . . . . . . 5% 4% 5% 4% $.02 I 2nd Ou a ter . . . . . . . . . . . . . . . . . . . . . . . . . . 5% 4 5% 4% .03 L r 3rd Ou arter . . . . . . . . . . . . . . . . . . . . . . . . . . . 5% 3% 6% 3% .03 h 4th Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . 3% 2 74 4% 3% .03
$.11 i
Fiscal 1980 il ! 1st Ou arter . . . . . . . . . . . . . . . . . . . . . . . . . . . 4% 3% 5 3% $.03 r 2nd Ouarter . . . . . . . . . . . . . . . . . . . . . . . . . . 9% 3% 9% 4% .03 3rd Ouarter . . . . . . . . . . . . . . . . . . . . . . . . . . . 9% 7 9% 7% .04 i 4th Ouarter . . . . . . . . . . . . . . . . . . . . . . . . . . . 14% 6% 15% 6% .05 I $.15 l. I ( i) Af ter giving retroactive effect to the 3-foe 2 stock sp#t dscussed in Note 8. L r L k , I h $ 25 b L. _ . m_ ._ _ .s- - -
. s.
e : . . . Management's Discusvon and Analysis of the Summary of Operations Revenues increased by $9,699,000 or 72% in the fiscal year ended January 31,1980, as compared to fiscal 1979. Net income from operations was $2,223,000 compared to $871,000 for the year ended January 31,1979, an increase of 155%. Total eamings in the prior year were $1,580,000 after inclusion of an extraordinary credit of $709,000, recorded in the first quarter of that year, from the net proceeds of a life insurance policy paid upon the passing of the wife of one of the Companyt pnncipal shareholders. Revenues increased primarily due to a 67% increase in chargeable hours. The increased i_ workload was brought about by the continued recognition of the Companyt expertise by the market- ! place. The revenue increase took place primarily among domestic c5ents, as revenues from govem-t ment contracts and intemational c5ents remained constant with the prior year. The domestic increase
> was especia!!y notable in the areas of work subcontracted to the Company by large arch;tect/ engineers; and from utilities which have increasing requirements for services which utilize the Companyt piping analysis group.
f Net income as a percentage of revenues was 9.6% for fiscal 1980 as compared to 6.5%, before l i the extraordinary item, in the prior yeat The increase in margins is attributed to achieving a higher revenue base without corresponding increases in overhead costs; although employee costs increased parallel with a higher fee schedule which was in effect. l , For the fiscal year ended January 31,1979, revenues were 4% more than in the f' cal year ended January 31,1978. Net income before the previously mentioned extraordinary credit was 83% of the prior year ($871,000 compared to $1,047,000).The extraordinary credit brought that yeart income to
$1,580,000. Revenues increased between fiscal 1978 and 1979 primarily due to a higher fee schedule, I
as chargeable hours remained level between the years. Income without the extraordinary item was 6.5% of revenues compared to 8.1% for the year ended January 31,1978. The decine was due to increased hiring early in the year in anticipation of more work than materialized. This resulted in 7% less efficiency than the year before. Marketing costs associated with increased intemational activity and the opening of regional offices in Pittsburgh and Tulsa also affected margins. r L I i t
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CUENTUST Quadren stands on a record of accomphsh. Otner Agencies Asse rnent in pioneenng proonetary technology. Aerolet Nuclear Ca He,wa Steet & Iron Products Co . research and development - and in apply- A'gonne NatonalLaboratory Ltd (Japan) mg our capat>lities to meeting the needs of Banene Nonnwest 8Wnc H,,ata Va#ve industry Co . Ltd (Japan) our Clients. HitactsLtd (Japan) 8002 Allen & Hamilton,Inc-We welcome further inquines regarding our Departmentof Energy Institute for Nuclear Energy Researen company with confidence that you will find ( Aepubnc of Cninal Esson Electnc Institute Ouadrem your first and finest cfioice in pro. E Ga G. inc. isnis tron Mrks Co, Ltd (Japan) J A E R t. (Japan) fess!onaiservices Electnc Power Researchinstitute J A N A (Japan) FederalEnergy Mministraton Korea Electnc Company internatenal Technical Aesources Corp Korea Nuclear Engineenng Sandia Laboratones Services. Inc. e Arennect.Enginees; Coastructors a apan Alaeama Power Co Becnte IntematonalCorp (u Armansas Power & bgnt Co g Black & Vesten. Consultmg Engineers u ,,3,,,g,3,,sakusno
,,n, Argon 3 NbhC Service Co Brown & Root Inc. Ca.Ltd (Japan)
Saiteo e Gas & F.ectoc Co Burns & Roe. Inc- NHK Sonng Co.Ltd (Japan) Boston Eo son Co C F Sraun & Ca Nugata Engineenng Co .Ltd (Japan; Caronn; Power & bgnt Co Custodis ConstructenCo N.ppon Benkan Mogyo Co. Ltd (Japanj Cencenate Gas & Eiecnc Co Ebasco Services. Inc. Nuciear Snip Development Agency (Jagan) Cleve anJ Electnc ibum.natir:g Ca Fluor Poneer. inc- Santo Engineenng & Construction Co . Commonwenien Eeson Co Freese and Nicnois (Japan)
' Consumers Power Co Gebs and Hill. inc. Snontsu SeisakusnoCo.Ltd (Japans Detro<t Esson Co Gdbe t Associates. Ine- Taiwan Pmr CmpangRepm Duke Power Co Harra Engineenng Co of Cnma)
Ducuesne L gntCo Jeico incorporated ToaVMCoMd (Japan)' Ge6erai %dc Utis tes Co*> Jonnson Controis. Inc. W BosaiSesues Co Ata (Japan)
- Georg<a % e Cc- K8'Se' Engmeets Tokyo Electnc Power Co .(Japan)
Gut'Setes Utstifies Co Lester8 Knignt Utsue varve Co . Ltd (Jaoan) nous.eg.g..,ng g p3 ,Cc Mason-Jonnson& Associates llanois Power Co Norman Engineenng Co Europe inpa & M ch gan Powe Co Aaion M. Parsons of Micnigan towa Electnc bgnt & Power Co Santa Fe Engineers. Inc. A S K. (Switzertands LongistanJ Dgnting Co Sargent& Lundy Bredero(The Netneriandst Caorsoittaly) Louisiana Power & bgnt Co Steams. Roger. inc. M.ssisscoi Power & bgnt Ce Central Nuclear de Almara2(Spa n) Stone & Weester Engmeenng Coro CentralNuclearde Asco(Spam) Netrista NDhc Power Distnct Un'ted Engmeers & Constructors. Inc. CentralNucseardeValdecapaneros Niagara Monawk Power Corp (Spam) Nomeest utAtees Se'vice Co Equipment Suppliers Compnm Beigium) Novem andiana Nbhc Serv ces Co EDES(Spain) Nomem States Nwer Co An.ed-GeneralNuclear Services Attantic Ricnfield Hanford Co Ewetrowan Engineenng Servicesita Nucrar Protects. Inc (SNUPPS: on.o Esson Co Atomiclntematonal (Swit2edan@ Baocock & Wacon Ca Empresa Nacionalde ingerweray OmanMbbhe Power 0.stnet Boeing Aerospace Co Tecnos gia.S A (Span) Pacific Gas & Electnc Co Bostrom 8ergen Metal Products Ernpresanos Agrupados(Spain) Peansrivania Power & Lignt Co Endesa(Spain) Controt Data Corporaton Pmiawoma EiectneCo Delaval Enterpnses Ente Narenale Per LEnergia Porttand General Eiectnc Co Ewnnca maryl PcM ac Eiectr c Aner Co - Dresserindustnes.Inc. Power Autnonty of tee Sta:o of New D'k Esson Nuclear Co GETSCO(Switzerland) General Atomic CO una @gostama) Puohc Seen ce Co of Colorado Hidroeiectnca Espanoia.S A (Spact Pu:,hc Sennce Co of Omfanoma General Electnc Co (%9c Sew EiectrJ. 6 G.s to Neweet.Packard Co Memkra werkLeibstadtISwitzedane Puget Sound Power & Ugnt Co iTT Barton Merr*ranwch Munseoerg iSwitzerland) l Meyer Industnes Nucon 8 Y (The Netnertands) Aocnester Gas and Electnc Co Nooter Co poraten Tecnatom.S A (Spa n) Sacramento Municipas ut hty Distnet p,nseurgn DesMomes SteelCa Soum Cuohna Ewetnc & Gas Co Otner international Aocaw,einternatonalCorporation
. Soutnem Cahtornia Esson Co S,nger S,mu!aten Products Omsen Cornisson Federalde Electncidad Tennessee Vaney Autnoa'Y gg,,oog Tecs utst.es Sennees Co Soutnwest Tube Manufactunng Co Westem Piping Ce Instituto Nacenalde Energia Nuclear Todeoo Edison Co Westingnouse Esectric Co pq Unen Electnc Co Virg nia Ewtnc Power Co Westingnouse Hanford Co Wa suyon Nenc Power Suppsy W4 cons n Eiectnc Power Ca Wisconsin M.cnigan Power Co Wiscons n Nehe Sennce Corp untee ciomic Eteetnc Cc 27 t
1 i
Executive Officers Sherman Naymark. President Thomas J. Pashos, Senior Vice President John W. Linga felter, Senior Vice President President. Nuclear Services s International Corporation Roben H. Dempsey, Senior Vice President Joseph E Cemy, Secretary-Treasurer Regional Offices Overseas Marketing Agents Quadrex Corporation "&anscommerceIntemational AG
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Corporate Offices Zurich, Switzerland 1700 Dell Avenue Eltron Limited Campbell,Califomia 95008 Athens, Greece Telephone (408)446 2500 JapanTech Services Corporation Nuclear Services Corporation %kyo, Japan Division of Quadrex Corporation 1700 Dell Avenue UnitedIndustriesIntemational Seoul, Korea Campbell, Califomia 95008 Telephone (408) 446-2500 Cybemetics Company, Ltd. Nuclear Services Intemational Corporation Bangkok, Thailand (Wholly Owned Subsidiary) Nuexco Pacific Pty. Ltd. 1700 Dell Avenue Sydney, Australia Campbell. California 95008 Ingenieria, Estudios y Proyectos N1P, S.A. Telephone (408) 446-2500 Madrid-20 Spain Health Physics Systems,Inc. Bee and Liang Co., Ltd. (Wholly-Owned Subsidiary) Taipei, Taiwan 2727 N.W.43rd Street Gainesville, Florida 32605 Telephone (904) 373-6066 Michigan Nuclear Services Corporation (Wholly-Owned Subsidiary) c/oThe Corporation Company 615 Griswold Street Detroit, Michigan 48226 Pittsburgh Office Edgetown Square, Suite 201 l- 1005 Beaver Grade Road l Coraopolis, Pennsylvania 15108 Telephone (412)262 3062 The people shinvn im the preteding pagn rer-Alsa Office rneni iuu a few of the mer soo crnp%cn of . PARK 21 Quadren Corporatum Alw shimn arr the san l Onofre Nutirar Plant of southern Cahfornia . 2622 East 21st Street Ednon near san clernrnie.cahfornia and the ! Wisa Oklahoma 74114 Praine island Nu(trar P! ant of Nonhern stain ' Telephone (918) 749 2582 """C'"P'"Y**h"'""'" ! I ( 28 i l lm e .
4 1 1 SECURITIES AND EXCHANOE COMMISSION Washinlston, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15( SECURITIES EXCHANGE ACT OF 1934 31, 1980 Commission file No. 0-7600 fiscal year ended January
- For the QUADREX CORPORATION (Exact name of registrant as specified in its charter) '
94-1708917 California _ __(I.R.S. Employer (State or other jurisdiction of Identification No.) 4 incorporation or organization) 95008 1700 Dell Avenue, Campbell, California (Zip Code) 1 Address of Principal Executive Offices) (408) 446-2500 Registrant's telephone number, including area code: to Section 12(b) of the Act: Securities registered pursuant NONE of the Act: Securities registered pursuant to Section 12(g) Common Stock (Title of Class) (1) has filed all reports ities Exchange Indicate by check mark whether the registrant h t r period required Act to be filed by Section 13 ort 15(d)' ) and (2) ofhas the Securof that the registraat was required to file such repor s ,to such filing r been subject No Yes X ' (APPLICABLE ONLY TO CORPORATE ISSUERS)
's Indicate the number of shares outstanding of each ofredthe by this issuer classes'of common stock, as of the close of the period cove report.
Outstanding January 31, 1980 Class 3,039,452 oCommon Stock
. ITEM 1. BUSINESS I Nuclear Power and the Company's Eusiness Generally Quadrex Corporation, through its principal operating division, Nuclear Services Corporation, together with its wholly owned subsidiaries, Quadrex International Corporation (formerly Nuclear Services International Corporation) and Michigan Nuclear Services Corporation, provides ongineering, technical, and~other services with respect to the planning, design, construction, start-up and operation of commercial nuclear power plants. These services represent the Company's principal' business cetivity. The Registrant, is, however, seeking to extend its services and business activities within the nuclear power industry and into non-nuclear energy and energy related fields. In furtherance of these objectives, in January of 1980, Registrant acquired Health Physics Systems, Inc., a Florida corporation (hereinafter referred to as "HPSI") engaged in providing decontamination and radiation waste reduction services and equipment to the nuclear power industry.
Registrant intends to continue to operate this business as a wholly owned subsidiary and expand its activities in such areas. To date, non-nuclear activities have not been significant. As used herein, the terms " Registrant" and " Company" refer to Quadrex Corporation and its divisions and subsidiaries. Nuclear power plants produce electricity for use in homes, offices and factories. At the end of 1979 there were 71 nuclear power plants generating electricity in the United States, which accounted for approximately 12 % of the United States electrical output. Another 113 nuclear power plants are under design, construction or order with the majority scheduled for operation by 1985.. The Company provides services to electric utility companies who own and operate the power plants; architect-engineers and engineer-constructors who generally design and build the plants; equipment manufacturers who produce and supply equipment for the plants and the United States government which funds research and development work in the nuclear energy field and which, through private contractors, owns and operates certain nuclear facilities. The services are rendered with respect to both' foreign and domestic projects and power plants. (Please refer to Foreign Operations discussion below). The design, construction, start up and operation of a nuclear power plant.has been, and continues to be, an increasingly costly and lengthy undertaking. Depending upon size, location and other factors, by the time of-its initial commerical operation, a utility's invest-ment for a 1000 megawatt electrical plant could range from one billion to one and one-half billion dollars per plant. The period of time from the decision to construct a plant until its initial operation generally ranges from 10 to 14 years. In addition, plants are designed for 40 years of operation and require periodic maintenance, repairs, _ . . _ . ~- - __ . _. _
provide radiation shielding. The storage pools initially designed for power plants were intended to be temporary holding locations before chipment of spent fuel to a reprocessing facility. Delays in the development of reprocessing facilities have required that the spent fuel storage capacity of almost all plants be increased. The Registrant has developed spent fuel storage rack designs for increased etorage of spent fuel in reactor storage pools. Applying the technology developed by it, the Registrant has designed racks for particular plants and in certain instances.will, through subcontract arrangements made by it,
-furnish the actual rack hardware itself to its clients.
The Company uses a number of computer codes in its design and design analysis-work. In particular, computer codes are used to design and perform stress analysis on piping systems and structures for. analysis of postulated pipe ruptures. The Registrant makes these codes available to the industry through direct sales and through leasing arrangements between the Registrant and Control Data Corpor-ction and other computer leasing companies. It continually updates these codes as knowledge increases. The NRC, as well as sound engineering practices, requires equip-ment manufacturers to demonstrate that plant systems, including safety systems, will perform in accordance with design objectives and criteria. The Registrant provides testing and analysis services which assist its clients to perform the requisite testing. Prior to and during the period in which a nuclear power plant is initially being placed in service, detailed and extensive inspection, testing and operation of plant systems, components and equipment is required by sound engineering practice and the licensing and other requirements of the NRC and other governmental authorities. The Registrant provides plant startup testing services which include the preparation and development of technical inspection, testing and operating procedures and programs for use in complying with such practice and requirements. The Registrant also furnishes field engin-eers to provide technical guidance and consultation and to otherwise support the utility client during the testing and startup periods. The Registrant assists in the technical analysis, interpretation and ovaluation of test results to determine conformance to design ob-joctives and plant technical requirements. The Registrant also provides services during plant operation. Plant operation assistance services include the preparation and development of technical procedures and programs for use in operation, surveillance, inspection, maintenance, and repair of plant systems and components during plant operation. These procedures and programs are
- required for sound economic plant operations and to comply or demon-strate compliance with the technical operating specifications to which the plant is licensed. The Registrant is available to assist in the implementation of the procedures and programs and in the technical analysis, interpretation and evaluation of information resulting from such implementation. In addition, the Registrant provides power plant back fitting and upgrading as well as other plant alterations and l ' modifications. The utility industry is placing increased importance l^
i
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. market in the nuclear power industry. The' Registrant's technical ~
h . capabilities'and extensive project experience are believed by management I
- to have potentially wide. application in various energy and related technology-intensive fields. 'During_the last fiscal year, however, the ' revenues' generated by non-nuclear business have not :been significant.
I Company Organization The/ Registrant's : nuclear. energy engineering and technical services ! . functions;are divided as follows: domestic nuclear clients are served '
~byJNuclear Services Corporation, a division of the Registrant; foreign nuclear _ clients are served by the Company's wholly-owned subsidiary
-Quadrex International Corporation; and domestic non-nuclear clients are served byfthe marketing and~ management services of the Registrant's Energy : Systems Operation. Registrant's activities with respect to !
decontamination and radiation waste reduction equipment and services are served by its wholly owned subsidiary,-Health Physics Systems, Inc. Nuclear Services Corporation technical personnel are organized into practice groups according to the predominant' type of work engaged
.in. The Engineering group is responsible for design, analysis, and
'f abrication of power plant equipment and systems, and for services involving plant licensing and safety, plant reliability, risk assessment, environmental factors and effects, and records management. . Services l -include mechanical engineering (such as. design of. spent fuel racks),
- 4. electrical, instrumentation and control ~(such as control panel instru-montation engineering) and reactor. engineering. -Tae group performs design' review work and design and modification work for existing L plants.to conform to new codes and regulations. This group has assisted L foreign manufacturers in obtaining necessary.. certifications in order toisell' products in the United States. This: group.also makes use of advanced analysis and engineering techniques to solve plant design problems.affecting:all~ phases.of construction and. operation. Services include civil and structural: design, seismic engineering, and analysis ofLpressure' vessels and piping; Utilizing computer analysis, it works
-on' problems of a generic nature and is~ responsible for much of the Company's computer' code work. Examples of the foregoing include the L development of investigatory and' analysis methods for plant feedwater L systems and the identification of potential flow induced vibration L problems, -and the development of standard pipe whip restraints.
The Operations and. Projects group. assists utilities in the management of construction projects and' plant startup and provides services to operating plants, including outage-management, control rod drive ! maintenance, integrated maintenance control systems, and spare' parts programs.. The Project. Management group, under Operations and Projects, ! is responsible for integrating.the efforts of the Company's practice gr.oups on major projects, and for new product ' development. . During i [ i ( L r 1 l I
4 t ITEM 1. BUSINESS Nuclear Power and the Company's Business Generally Quadrex Corporation, through its principal operating division, Nuclear Services' Corporation, together with its wholly owned subsidiaries, Quadrex International Corporation (formerly Nuclear Services . International Corporation) and Michigan Nuclear Services Corporation, provides engineering, technical, and other services with respect-to the planning, design, construction, start-up and operation of commercial nuclear ~ fpower plants. These services represent.the Company's principal business activity. The Registrant, is, however, seeking to extend its services , and business. activities _within the nuclear power industry and into' non-nuclear energy and energy related fields. In furtherance of these objectives, in January of.1980, Registrant acquired Health Physics Systems, Inc.,-a Florida corporation (hereinafter referred to as "HPSI") engaged in providing decontamination and radiation waste 1 reduction services and equipment to the nuclear power industry. Registrant intends to' continue to operate this business as a wholly owned subsidiary'and expand its activities in such areas. To date, non-nuclear activities have not been significant. As used herein, the terms " Registrant" and " Company" refer to Quadrex Corporation and its divisions and subsidiaries. Nuclear power. plants produce electricity for use in homes, offices and factories. At the end of 1979 there were 71 nuclear power plants generating electricity in the United States, which accounted for approximately ~12 % of the United States electrical output. Another 113 nuclear-power. plants are under design, construction or order with the ma'jority scheduled for operation by 1985 The Company provides services to electric utility companies who own and operate the power plants; architect-engineers and engineer-constructors who generally design and build the plants; equipment manufacturers.who produce and supply equipment for the plants and'the United States _ government which. funds research and' development work in-1- the . nuclear energy field and which, through private contractors, owns and1 operates certain nuclear facilities. The services are rendered with' respect to both foreign and domestic projects and power plants. (Please refer to Foreign Operations discussion below). The desi'gn, construction, start up and operation of a nuclear power-plant has been, and continues ao be, an' increasingly costly and lengthy undertaking. Depending upon size, location and other factors,
'by the time of its initial commerical operation, a utility's invest-ment for a 1000 megawatt electrical plant could range from one billion ito one and one-half. billion dollars per plant. The period of time from the~ decision to construct a plant until its initial operation generally ranges from 10 to 14 years. In addition, plants are designed for 40 years of. operation and require periodic maintenance, repairs,
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' 1 e
i replacement of equipment,. testing and. refueling. Stringent governmental and. industry licensing,; safety and quality assurance requirements, . oxtend over the entire construction period to initial operation and ' 1thereafter.throughout the operating life of the plant. Nuclear power plants are. complex and intricate. The trend is for these requirements, complexities and intricacies to increase rather than decrease. The result is a corresponding increase-in engineering work required with respect to these plants. . 2 Services and Equipment Provided by the Company E The major feature of a nucle'ar power . plant .which distinguishes it
- f rom 'the other electric power- generating facilities is the nuclear
. reactor. The nuclear reactor and certain majoy' accompanying systems are principally designed by the reactor' manufacturers. Die balance of the plant is designed principally by architect-engineers or engineer-constructors, or,='in some cases, by the utilities themselves. The services providei by.or available from Registrant run the full gammit f rom . the initial planning of a facility through .its decommissioning.
These services. include conducting siting studies and environmental-impact assessments in the geographical area of a-proposed plant. The Registrant can assist its clients in the preparation and review of technical specifications and engineering criteria (used in connection with the procurement ofl plant systems and equipment, in the preparation of. portions of safety reports required by federal, state and local jovernmental~ authorities and in analyzing plant safety systems, the
' failure consequences'of such systems and the potential radiation effects of the plant on the environment, all'under normal and abnormal-conditions of operation.
The Registrant makes available, and provides to the participants
.in a. nuclear power. plant project,' including the~ utility owners, engineering and technical services in the design and analysis of the mechanical, electrical, chemical, metallurgical and structural, including seismic, aspects of plant systems, components, and struct-ures. The Registrant also provides the independent engineering design review for-plant systems, structures and equipment related to the operational safety ~of the plant which is required by regulations of-L Lthe Nuclear Regulatory' Commission ("NRC") and sound engineering practices. At other times, the-Registrant will provide design engineering
-services in either specialized or general disciplines for architect
-ongineers and. major equipment and systems suppliers and during the Company's fiscal year ended January 31, 1980, piping analysis and idesi6n services work accounted for a significant portion of the Company's
' r,e v e n u e s .
o
~C Augmenting these services are' construction management services whijh aid a. utility's management of total? construction efforts by maintaining close control of construction costs and schedules.
e As a nuclear reactor produces energy, the used fuel, called
" spent fuel", is replaced with fresh fuel in the reactor core. Spent fuel 11s then stored adjacent to the reactor in pools of water which
_2_
provide radiation shielding., The storage pools initially designed for power plants were' intended to be temporary holding locations before chipment of spent fuel to a reprocessing facility. Delays in the development of reprocessing facilities have required that the spent fuel storage capacity of almost all plants be increased. The Registrant has' developed spent fuel storage rack designs for increased storage of spent fuel in: reactor storage pools. . Applying the technology developed by it, the Registrant-has. designed racks for particular plants and in certain instances will, through subcontract arrangements made by it, furnish the actual rack hardware itself to its clients. 22e Company uses a number of computer codes in its design and design analysis work. In particular, computer codes are used to design and' perform stress analysis on piping systems and structures for analysis of-postulated pipe ruptures.- The Registrant makes these codes available to the industry through direct sales and through leasing arrangements between the Registrant and Control Data Corpor-
.ation and other computer leasing companies. It continually updates
-these codes as knowledge increases.
.The NRC, as well as sound engineering practices, requires equip-ment manufacturers to demonstrate that plant systems, including safety systems, will. perform in accordance with design objectives and criteria.
The Registrant provides testing and analysis services which assist its
. clients to perform the requisite testing.
Prior.to and during the period in which a nuclear power plant is initially.being placed in service, detailed and extensive inspection,
' testing and operation _of plant systems, components and equipment is required by sound engineering practice and the licensing and other requirements of the NRC.and:other-governmental authorities. The Registrant.provides plant startup testing services which include the
. preparation and development of technical inspection, testing and I ' operating procedures and programs for use in complying with such 4
practice and requirements. The Registrant also furnishes field engin-i: . eers to provide technical guidance and consultation and to otherwise support.the utility client during the testing and startup periods. The Registrant' assists in the technical analysis, interpretation and ' evaluation of test results to determine conformance to design ob-(cetives and plant technical requirements. ( The Registrant also provides services during plant operation. ' l Plant operation assistance services includa the preparation and development of technical procedures and programs for use in operation, surveillance, inspection, maintenance, and repair of plant systems and
-components during plant operation. These procedures and programs are l
required for sound economic plant operations and to comply or demon-
- strate. compliance _with the-technical operating specifications to which n Ethe-plant is_ licensed. The Registrant is available to assist in the I -implementation of the procedures and programs and in the technical
. fanalysis,? interpretation-and evaluation of~information resulting from such implementation. In addition, the Registrant provides power plant back fitting and upgrading as well as other plant alterations and modifications.. The utility industry is placing increased'importance l m
l on maximization of' output from existing generating facilities. The
'Rogistrant.provides services to assist in optimizing plant availability - i the proportion.of time a plant is generating electricity .and plant
-capacity factor -- the ability of a plant to achieve and maintain rated generating capacity. .These services include outage management .
- end planning, computerized. maintenance and spare parts program, and an improved ~ fuel maneuverability-program. The Registrant performs diagnostic !
onalyses and economic analyses for potential modifications and backfits
.to. optimize: power plant productivity 3 as well as providing its full .
rcnge of engineering design, design. review, construction management, ' and testing services with respect to such modifications. ,
, Codes, standards, licensing regulations and sound management practices require a comprehensive program for assurance of.the quality of the design, construction, and operation of the plant. Audits, ,
inspections,-and nondestructive examinations are typical of the tech-niques employed in quality assurance. The Registrant develops and
' furnishes quality assurance procedures, programs and manuals for use by its clients in achieving quality assurance objectives and require- ,
mants.. In addition, the Registrant furnishes personnel to conduct, or to assist its1 client in performing, the necessary quality assurance i cudits and inspections at the client's home office, the offices or l plants ~of the major suppliers and the plant site. The quality assur-ance services provided by Registrant' include preparation and devel-
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opment of detailed inspection programs and procedures, the conduct of inspection and initial preoperational inspections of the plant and the performance of periodic inspections of equipment and components i during plant outages to monitor examination references established in ' th'e preoperational inspection. The Registrant provides assistance in the implementation of' programs and procedures developed by it and in the analysis, interpretation and evaluation of the results thereof and of the quality assurance audits and inspections. ; Government regulations, licenses and industry codes and standards also contain plant record keeping requirements. The Registrant develops and installs record management systems for the organization, filing, , microfilming and storage of required plant records. As indicated, nuclear power plants require periodic testing, refueling, repair and maintenance work. The clothing worn by personnel
-performing this-work and the tools used by such personnel are subject to radlation exposure and become contaminated. Through its recently acquired subsidiary, Health Physics Systems, Inc., Registrant intends to furnish decontamination (i.e.." cleaning".) equipment to plant
- operators _and owners and in certain cases may provide such equipment end.related. services on a lease or outage basis.
Non-nuclear Business During the last fiscal year, the Registrant continued its attempts to' extend its services and business' activities beyond its traditional l _ i
l l market in the nuclear power industry. The Registrant's technical copabilities and extensive project experience are believed by management to have potentially wide application in various energy and related technology-intensive fields. During the last fiscal year, however, the revenues generated by non-nuclear business have not been significant. Company Organization The Registrant's nuclear energy engineering and technical services functions are divided as follows: domestic nuclear clients are served by Nuclear Services Corporation, a division of the Registrant; foreign nuclear clients are served by the Company's wholly-owned subsidiary Quadrex International Corporation; and domestic non-nuclear clients are served by the marketing and management services of the Registrant's Energy Systems Operation. Registrant's activities with respect to dccontamination and radiation waste reduction equipment and services are served by its wholly owned subsidiary, Jealth Physics Systems, Inc. Nuclear Services Corporation technical personnel are organized into practice groups according to the predominant type of work engaged in. The Engineering group is responsible for design, analysis, and fabrication of power plant equipment and systems, and for services involving plant licensing and safety, plant reliability, risk assessment, onvironmental factors and effects, and records management. Services include mechanical engineering (such as design of spent fuel racks), electrical, instrumentation and control (such as control panel instru-montation engineering) and reactor engineering. The group performs design review work and design and modification work for existing plants to conform to new codes and regulations. This group has assisted foreign manufacturers in obtaining necessary certifications in order to sell products in the United States. This group also makes use of cdvanced analysis and engineering techniques to solve plant design problems affecting all phases of construction and operation. Services include civil and structural design, seismic engineering, and analysis of pressure vessels and piping. Utilizing computer analysis, it works on problems of a generic nature and is responsible for much of the Company's computer code work. Examples of the foregoing include the development of investigatory and analysis methods for plant feedwater systems and the identification of potential flow induced vibration j problems, and the development of standard pipe whip restraints. The Operations and Projects group assists utilities in the management of construction projects and plant startup and provides services to operating plants, including outage management, control rod drive maintenance, integrated maintenance control systems, and spare parts programs. The Project Management group, under Operations and Projects, is responsible for integrating the efforts of the Company's practice groups on major projects, and for new product development. During l l
D _ .m _ ._ . i 1 i l 1978.the_ Registrant opened regional corporate offices in Tulsa,. Oklahoma : I cnd in Pittsburgh, Pennsylvania under the direction of the Operations cnd Projects group. These regional offices are intended to provide better services, particularly in on-site technical assistance, to clients in the Eastern, Southern, and Midwestern states. The Operations and Projects group has also assumed responsibility for the Company's quality assurance services and for providing those services necessary for the Company to act as a domestic services representative for foreign manufacturers. Foreign Operations
- There are approximately 158 nuclear reactors presently in operation outside the United States and over 183 under design, construction or on order. The majority of thdse involve U.S. technology. Through its wholly owned subsidiary, Quadrex International Corporation (formerly Nuclear Services International Corporation), Registrant makes its engineering and technical services available with respect to foreign plants and utilites. With less alternative resources than the U.S.
most industrialized foreign nations are relying more on nuclear power to satisfy their energy needs. Quadrex International Corporation has clients in Italy, Korea, Spain, Switzerland, Taiwan, Mexico, Japan, Belgium and the Netherlands. It has also recently entered into a small study contract with the Peoples Republic of China and hopes this will' lead to additional work with respect to the project management of nuclear power plants in China. The European nuclear power program has continued to slow due to economic and political factors. Although the Company's revenues from Asian clients increased during the past year, c'evenues from European clients decreased and overall revenues from foreign operations decreased from $2,002,000 for the fiscal year ended January 31, 1979 to 1,802,000 for the year ended January 31, 1980.. At the same time that revenues from international operations were declining, revenues from domestic business increased, so that the proportion of total revenues derived from international operations decreased from 15% for the year ended January 31, 1979 to 8% for the year ended January 31, 1980. Although protection against liability for the consequences of a nuclear incident at a foreign plant comes from a combination of insurance, governmental indemnity and statutory limitation of liability as in the United States, the bases of these liability protection systems in foreign countries are markedly different from that'in the United States. Because of the geographic size of the countries involved, the lack of available private insurance and the nuclear liability laws of the various jurisdictions, the Company does not believe it has the same degree of liability protection with respect to potential nuclear incidents at foreign facilities as it has with respect to domestic facilities. (See Nuclear Liability Insurance discussion below.) The Registrant anticipates, notwithstanding recent decreases in business in Europe, that its international operations will increase
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and become increas'ngly i important to the Company. Since most foreign governments are desirous of developing their own domestic capabilities, there is an inherent long term risk associated with international operations. In addition, although the majority-of contracts are payable 1n dollars, and expenses are incurred domestically and-paid in
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dollars, the. Company does have exchange, currency and inflation risks, and because of currency restrictions and governmental. policies and practices international clients are generally slower in making payments than domestic _ clients. Relatively speaking, the Company therefore has
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.lcrger. receivables with respect to its foreign operations than for its domestic business. To date, services for foreign clients have been mSinly performed by personnel located in the United States or briefly in the client's offices, and the Company.does not have significant facilities or property located outside of the United States which
. might be subject to-expropriation. The Company is not dependent upon foreign' availability of materials or labor. Finally, although the Company has a greater percentage of fixed price contracts in its international operations than in its domestic business, the fixed
- price contracts for foreign operations have been more prv.itable than those for domestic business.
Decontamination and Radiation Reduction Equipment and Services As previously indicated, the Company acquired Health-Physics Systems, Inc., a Florida corporation in January of 1980. HPSI is engaged in the business of providing decontamination and radiation waste reduction services and equipment to participants in the nuclear power. industry. The clothing and tools of maintenance, refueling and , operational personnel.of a nuclear power plant may become contaminated by radiation while_such personnel are performing.their duties. HPSI solls decontamination _ equipment to clean their clothing and is developing equipment to clean the tools. HPSI also leases the equipment and subcontracts the related decontamination services to a utility client during an outage. Registrant plans to continue to pursue and to expand upon these activities. Methods employed by HPSI result in lower quantities of radiation waste for disposal than present when traditional cleaning methods are utilized. Clients During the year ended January 31, 1980, Registrant performed services for 54~ electric utilities, 13 architect-engineers and engineer-constructors and 20- equipment suppliers. Of Registrant's total revenues derived from these sources in this period, three customers (Sargent & Lundy Engineers, General Electric Company and Virginia Electric Power Company) accounted for approximately 18.4%,131% and 10 3% respectively, - of net revenues for this period. The following table contains a five year historical summary.of the dollar amounts (expressed in thousands of dollars) of revenues and the number of clients for each group. i
. . , _ _ , ,.,,,__._y, , , , _ , , . , - - - - , , ., . , - ,._...-,m- . _ , . , , , , ,,,,%_, . _ , _ , , -
)
1976 1977 l'978 1979 1980 Amt. No. Amt. Nc. Amt. No. Am t . No. kmt. No. l 51cctric $ 6,664 32 $ 4,666 45 $ 7,716 40 $ 7,925 42 $12,994 54 Jtilities techitect 1,950 17 1,464 23 1,838 29 1,233 19 5,114 13 Ingin3ers and Engin-3;r con-structors Iquipment 1,530 32 3,476 28 3,365 23 4,251 28 5,000 20 luppliers _ _ _ _ _
$10,144 11 $ 9,606 31 $12,919 22 $13,409 81 $23,108 11 Contracts and Backlog Substantially all of the agreements under which the Registrant provides services or other work fall into two categories. One category includes those agreements in which the Registrant is obligated to furnish services or equipment on a fixed price basis. As of January 31, 1980, the Registrant was obligated to provide services or equipment under such arrangements with a total sales price of $812,000.
The second category includes agreements in which services are parformed on a time and material or rate schedule basis. The second . category is by far the largest. Agreements in the second category are c'ither terminable expressly by the client on short written notice or the client controls the amounts of services to be performed through an oxpress contract provision granting such right. Subject to such termination or control rights, as of January 31, 1980, the Registrant was obligated to perform services, estimated in terms of potential cross revenues, of a value of approximately $20,188,000. Although past oxperience would indicate a significant amount of such revenues will be realized, the amount thereof cannot, because of the foregoing considerations, be considered a backlog. Subject to the considerations set forth above, as of January 31, 1980 and January 31, 1979, the Registrant was obligated to perform services, estimated in terms of potential revenues, of a value of
$21,000,000 and $9,700,000 in the aggregate, respectively.
Raw Materials and Equipment The Company's primary business activity is the performance of services. Accordingly, it is not dependent on others for raw materials. See Employees discussion below.
. . - ~ . . . . . . .. .
The Company's entry into the manufacture and sale of equipment for decontamination and_radiaticn waste reduction through its subsidiary HPSI will involve the purchase ol' some raw materials and the great majority of the equipment and system components which will constitute its product. tre Company believes it has adequate sources and arrangements to meet its needs. Seasonal Variations The Registrant's work is of a. technical nature associated with power plant operations and long term design and construction projects. I To date the Registrant has not experienced any seasonal or rapidly varying work cycles. Governmental Contracts Approximately $920,000 in revenues (4% of total revenues) were received by the Company during its fiscal year ended January 31, 1980 from governmental work, an increase of 18 3% from revenues for similar work during the previous fiscal year. The margins produced by governmental egency work are less than that normally experienced on regular commercial work. No renegotiations have been experienced to date. Patents and Trademarks During the Company's fiscal year ended January 31, 1977, the Registrant obtained three patents with respect to its spent fuel storage rack designs. As previously indicated, it has also developed and is improving certain proprietary codes. KPSI has certain patents pending with respect to its processes and equipment. Registrant believes these patents are important and will play a significant role in HPSI's business. The Registrant's business is not directly dependent upon the foregoing or any other patents, trademarks, licenses, franchises or concessions held. Competition As stated previously, the Registrant's principal business consists of providing engineering, technical and related services. Prices, availability, reputation, performance and personnel capability are all
- factors in the marketplace for such services, and the Registrant l believes it is competitive in all areas.
There are approximately 15 architect-engineer or engineer-constructor firms and approximately 8 to 10 large specialized engineering and - service firms in the United. States, other than the Registrant, which provide major services to the nuclear power industry._ In addition, utilities, architect engineers and equipment suppliers are utilizing existing personnel made available by the past industry slowdown to perform for themselves some of the services which have heretofore been
. =. _ _ - . - - - _ . . __ _. . _ . . - _ .- -- -
I provided'to:them by others. All of.the foregoing are actual'or potential competitors or'the Registrant in the market for one or more of the !. services offered-by the Registrant. I All of the foregoing types of competitors are capable'of either providing or expanding their activities to provide the power plant engineering and technical services described above, and some have expanded their. activities during the~past year. Competition for performance of various. parts of the quality assurance services at present arises from approximately five specialized engineer firms and numerous independent consultants located in the United States; however, ; a number of architect-engineers or engineer-constructors firms and to ' some extent a number of utilities either have or could easily acquire-the capability to compete with the Registrant. Competition for the design of spent fuel storage . racks and other specialized equipment comes from the approximately six specialized engineering firms and 4 other' consultants in the nuclear. power plant engineering business as well as the~ equipment suppliers themselves. Competition for the manufacture and fabrication of specialized equipment cannot, however, be quantified. Depending on the particular item, competition could 1 come from many sources. Expansion of service capability or more ofrective utilization of service capability caused by the industry slowdown, by~all participants.in the nuclear power industry, including-utilities, will cause competition to continue to'be more intense in the future.
~
The Company is just' embarking on services in the non-nuclear fields and competition ~can be expected to be as intense as in the nuclear field. g With respect to the manufacture or. sale or lease of decon- ! tamination and radiation reduction equipment, there are presently four firms in competition with HPSI. This competition is also expected to be intense and the patents obtainec by HPSI may be of assistance to it in this area. ,
' Employees TheLRegistrant's principal ~ resource is its professional and other
, personnel, and its success is related in large part to the talents and ! skills of these people and the management, organization and applic-ation of such talent and. skills.to the performance of services. In ~
~ spite of the continued slowdown in the nuclear power industry, the
-Company's business has been-expanding and there is demand and competition for-qualified persannel.
Experienced professional personnel can generally only come'from corporations,' firms or other entities within the industry, some of which may be competitors, or within related technological industries.. Other professional ~ personnel can be hired upon graduation from college. -As.~of January 31, 1979, the Registrant I 1
.___ n _ ___ _ __ . _ . _ .._
had approximately 254 employees of which'199 were engineers, scientists
.or other professional employees. During the fiscal year ended January 31, 1980, the Registrant's business increased and it consequently increased its staff with the result that as of January 31, 1980, the Registrant had approximately 450 employees of which 357 were engineers, scientists or other professional employees. Registrant has at times experienced some difficulty in hiring qualified personnel when such employment becomes necessary and in retaining qualified personnel. It is expected that such difficulty.may continue for highly experienced and capable people.
Facilities and Environmental Considerations The Registrant's primary business.is one of providing engineering, technical and other services and, at present, with respect to these activities, alloof its facilities are office or testing facilities. The manufacture of decontamination and radiation reduction equipment by'the Company.primarily involves the final assembly of components and . equipment manufactured by others and purchased by the Registrant and-refurbishing its mobile lease units. Facilities of this component are primarily warehouse, testing and office: facilities. Accordingly, the Registrant plans no capital expenditures in order to comply with federal, state or' local provisions regulating discharge of materials into the environment or otherwise relating to the protection of the environment from harmful effects caused by the Registrant's operations.
.The environmental effects of nuclear power plants under normal operating conditions, as well as abnormal or accident conditions, have been of great. concern to the public and the federal, state and local governmental authorities exercising regulatory jurisdiction over the plants. Concerns include potential environmental effects of plant radiation and thermal discharges. As a consequence, federal, state and local regulations require specified reports and analysis of environmental. considerations as prerequisites or conditions precedent
~
to issuance of licenses or permits required for plant operation and
-the continuous monitoring and surveillance of. plant discharges. As a part-of its services, the Registrant has'the-capability of assisting its clients in making the requisite analyses and studies and in preparing reports to governmental authorities. The Registrant can also assist its clients in the development and preparation of. procedures and programs to carry out the ongoing environmental monitoring and
- surveillance?of plant operations and the implementation thereof, including required physical surveys. The activities carried on by Registrant's wholly. owned subsidiary HPSI are intended to assist Registrant's clients work with, minimize and overcome the effects of radiation and radiation waste' disposal.
Nuclear Liability Insurance In order to construct and operate a commercial nuclear power plant, federal law requires the utility to.obtain a construction
permit and an operating license from the NRC. As a condition of the operating license, present law requires that the utility maintain financial protection to cover liability to third parties for' personal injury.or property damage arising out.of a nuclear incident at the proposed facility in the amount of liability-coverage available from private sources. Present law also requires the federal government to provide additional financial protection to third parties injured or damaged as a result of a nuclear incident and limits the total liability to the aggregate dollar protection afforded by private and governmental sources. The form of the insurance policy and governmental protection 1s-set forth in federal regulations and is afforded to all participants, including the Company in the design, construction, and operation of the plant. Until December of 1975, the government was authorized to afford such governmental protection to licensees of power plants who obtained a construction permit before August 1, 1977 In December of 1975, the law was extended for an additional 10 years and certain additional changes were made with the objective of providing a mechanism for increasing private insurance pools and decreasing governmental indemnification while retaining the principles of the liability protection system discussed above. During 1978, the-United States Supreme Court overturned a lower court decision which had declared unconstitutional that portion of existing law which limits the total liability arising out of a single incident. The Company maintains no independent nuclear liability insurance and therefore it could be adversely affected by any judgment against it which is not covered by the protection discussed above.
- Neither the insurance nor indemnity agreement referred to above extend protection against liability for damage to the plant itself in the event of a nuclear incident at the plant site. The Company does not maintain any independent insurance providing protection against this potential liability and therefore it could be adversely affected by any judgments against it. ,
As indicated above, the Company does not believe the nuclear liability protection. laws of foreign countries afford the Company as much protection as the laws applicable in the United States. No private insurance is reasonably available to the Company. Professional Liability Insurance Although the Company has under consideration a proposal for errors and omissions insurance, at the present time, the Company does not maintain any insurance covering potential liabilities arising out of errors or omissions in the performance of engineering services by the Company. Accordingly, the Company could be adversely affected by any judgments against it. Material Changes and Developments Since the beginning of the Registrant's fiscal year which commenced on February 1, 1979, except as noted below there has not been any
- -. \
significant or material changes in the kinds of services rendered by, or available in the market place from, the Registrant. Changes, or modifications, have continued to occur, however, in the markets for such services and consequently in the business done or intended to be done by the Registrant. Material continuing developments included the following:
- 1. During 1979, electric power consumption in the United States increased by approximately 285% over the electric power consumption for 1978. This, as well as the 2.6% rate of 1978, represent an extremely depressed growth rate from the levels of 1977 and 1976 of 5 1% and 6 3% respectively. Most forecasts continue to anticipate a long-term growth rate for electricity use in the 3 1/2 to 4 1/2 % range per year. During 1979, however, the electrical utility industry continued to slow the rate of additions to the nation's generating capacity. No new nuclear generating units were ordered. Construction schedules for some nuclear plants were deferred and orders for others were cancelled.
Orders for new fossil generating units continued a mild recovery from a low point in 1976. Utilities ordered 20 new fossil generating units averaging about 550 megawatts during 1979 Some previously ordered fossil units were also postponed or cancelled. The nuclear industry continued to work off the large backlog of previously ordered plants. Activity in this area and operating plant engineering allowed the Company to increase its revenues and its orders received during the fiscal year ended January 31, 1980. The net effect of the continued state of the business was an increase in available engineering business of the type done by the Company since engineering work associated with licensing and plant modifications taxed the existent available capabilities of the industry. The backlog will peak within the years ahead at which time the lack of new orders may be more noticeable.
- 2. During 1978, Congress passed and the President signed the National Energy Act, comprising five separate bills. However, it is still impossible to predict precisely what impact the Act will have on the' placement of orders for new generating capacity by electric utilities, and, therefore, on new plant designs the business available to the Registrant. This depends in large measure on the manner in which various Federal and State agencies, regulatory bodies, and courts administer and interpret the numerous and complex provisions of this legislation. The Power Plant and Industrial Fuel Use Act of 1978 prohibits the use of oil or natural gas as a primary fuel in both new and existing power plants. This appears to encourage the development of coal and nuclear plants as the principal available alternatives.
However, the Secretary of Energy has, since the passage of the Act, encouraged continued use of gas, and substitution of gas for oil in power plants. Thus the lack of certainty about and direction from national energy policy which characterized the situation prior to passage of the National Energy Act seems likely to continue for some time, at least. The energy conservation and utility rate reform provision of the Act provides another source of uncertainty to electric utilities. Their potential impact on future load growth and on the financial capability of utilities in undertaking capacity expansion cannot be reasonably estimated at this time. Should this uncertainty
be prolonged,; utilities may continue to forgo' investments in new capacity that they would otherwise have made to meet forecasted load-growth. f This_ would .then result in a _further decrease in available L engineering business connected to design and construction of new
-plants. Conversely, it would be reasonable to expect an increase in , , nva11able. engineering business _with respect to modifications and upgrading of existing' facilities.
L 3 At this writing a' number of-investigations have been made l andLcontinue to be made with respect to.the accident at the Three Mile Island Nuclear-Power Plant. . Studies and analyses to date have resulted in a number of recommendations regarding plant modifications and operation, additional testing and training and additional studies and
- -survellance. The net effect has been to increase the available engineering ;
- business with' respect to nuclear power plants. It is still difficult to predict what the long term effect the accident will have on either the industry in general or Registrant.
- 4. Slui decrease in new plant orders and construction has permitted some utility companies and architect engineers to utilize their own-engineering staffs for the performance of services they previously obtained from outside firms, including the Registrant. Competition c'ontinues to be greater among the participants in the industry, with'
. purchasers of services placing greater emphasis on marketing, capability, prices and availability and~1ocation of services.
5 Although the Company continues'to offer services from initial
' planning to. operation of a nuclear facility, the decrease in new plant
' orders,,the deferral of some construction schedules, the increased in-i house staff utilization by utilities and architect-engineers, the
-construction schedule progress of those plants being built and the s
increase in safety and other' design requirements, have caused a change L or shift in the character or-kind of business available. In general, less business 1s available at the planning and beginning stages of plant construction and more is available with respect to plant modifications i system designs:and at the end of the construction schedule or during the startup or operation of the plant. The Company is increasing its - activities in these areas.
~
! ~6. Most industrial nations in other parts of the world have L .less _ indigenous energy resources than the United States and their
. reliance on and commitment to nuclear power continues to grow. Accord-ingly, overseas markets represent a source of revenues to the Company and during the year the Registrant continued to increase its marketing efforts in these areas. However, as mentioned earlier (see Foreign Operations discussion above) overseas revenues declined from those of thel previous year. In Europe, recovery from the 1974-75 recession has beennmuch slower than in~the U.S. Reduced load growth has been primarily responsible for slowing the development cf nuclear power in Europe.
Secondarily it has been affected by political-controversies and regulatory restrictions. With'a reduction in the available business, competition
' has lincreas ed.1 Although foreign utilities have relied heavily on U.S. i suppliers' and technology in tthe past and, to some extent still do, these; utilities generally favor domestic suppliers and engineers where The Registrant they.are, competitive in prices, capability, and service.
m1Me ;
'~
will continue to actively seek business overseas. The matter of U.S. governmental policies related to uranium and plutonium proliferation and their. potential impact on commercial relations between U.S. companies and foreign governments and utilities remains unresolved. If the l impact is adverse, available business will. decrease. 7 During'the year the nuclear industry continued to experience : delays in construction caused by delays in the regulatory process, l Judicial proceedings and continued environmental concern. Attention j focused on a number of areas, including reprocessing of irradiated fuel'and disposal and storage:of waste products. These delays and concerns continue to have a negative effect on.the growth rate of nuclear power plant capacity.' The. concerns have'also, however, increased' governmental support of research and development activities involving spent fuel disposal and storage and other aspects of the end of the fuel cycle. This increased activity-provides an increased business opportunity to the Registrant. In addition, the federal government has introduced in Congress proposals to expedite the regulatory process.
- 8. As previously stated, in January of 1980 the Company acquired Health Physics Systems, Inc. HPSI produces decontamination and radiation wasce reduction equipment for use in connection with nuclear power plants. - This acquisition represents the Company's first entry into the manufacturing business, Lits activities previously being related primarily to providing services on a fee for services basis.
9 Since 1975, the Company has attempted to pursue the sale and performance of engineering and technical services in areas other than nuclear, however, - to date the Company's activities outside the nuclear energy field have not been significant. ITEM 2.
SUMMARY
OF OPERATIONS The Summary of Operations, including Management's Discussion and Analysis of the Summary of Operations, set forth in Registrant's Annual Report to Shareholders for the year ended January 31, 1980, a copy of which is attached hereto, is incorporated herein by reference.
!!EM 3 FROPERTIES The Registrant's principal offices are located at 1700 Dell Avenue, Campbell, California and consist of approximately 55,000 square feet of engineering and administrative offices and related facilities.- These facilities are owned by the Registrant and were
-constructed by it on approximately five acres of land purchased in L June of 1973 Construction was substantially completed in March of
- 1975 and the Registrant occupied the offices in April of 1975 The o total cost of land and its improvements amounted to approximately g $2,500,000. In 1975 the property was. encumbered by a 25-year mortgage in the amountoof $1,275,000 with interest at 9 1/2%. The principal balance
- as of January 31, 1980 was $1,195,517 66. The debt is payable in
- L i , , , , , - - - - . - --..- ..~.-. .- ., - ., - .. - - _ .-,- . - - . - ..... -.
squal monthly installments of $11,140, including interest, through the year 2000.
.The growth in Registrant's business and the increase in the number of its employees during the fiscal year ended January 31, 1980 caused Registrant to lease approximately 16,000 square feet of office space in a' facility adjacent to its present facilities during such year. . Lease costs amounted to $5,215 per month commencing October 1, 1979 and are expected to. continue through Septe2ber 30, 1982. On November. 27, 1979 Registrant's Board of Directe 's approved the construction of 16,700' square feet of additional office fac.tities to be added to Registrant's present facilities. The estimate, cost of these facilities is $1,200,000. Construction began on March 3, 1980 and is expected to be : completed August 31, 1980.
HPSI-presently leases 1500 and 1350 square feet of office and warehouse facilities, respectively, in Gainesville, Florida and is looking for larger leased fac11 ties to accomodate the expected growth in its activities. Present-lease costs are $1,647 per month. 1The Registrant's other property consists of office equipment, ongineering tools-and equipment, laboratory and field test equipment, microfilming equipment and automobiles and trucks all owned by the Registrant. The principal physical properties of the Registrant are in good c condition and well maintained. ITEM 4. PARENTS AND SUBSIDIARIES 2 Parents (Number of Sharer as of April 15, 1980) Number of Shares Beneficially Percentage Relationship to Held, Directly_ of Securities Name Registrant and Indirectly Owned SHERMAN NAYMARK (1) Director, 733,757 (2) 23 8% (2) President THOMAS J..PASHOS (1) Director, Senior 462,211 (3) 15 0% (3) L Vice President t L JOHN W. LINGAFELTER (1) Director, Senior 402,915 (4) 13 1% (4) Vice President RONALD L. NAYMARK (1) Director 770,572 (5) 25 0% (5) [ i l l
9 JULES PEARLMAN (1) Director 729,601 (6) 23 7% (6) JANET N. STONE (1) None 566,798 (7) 18.4% (7) (1) Each is a director of the Company. Sherman Naymark is also President of the Company and Thomas J. Pashos and John W. Lingarelter are. Senior Vice Presidents. Ronald L. Naymark is an employee of the Company and
- Jules Pearlman is a partner in the law firm of Pearlman & Bose, counsel to Registrant. Sherman Naymark is the father of Ronald L. Naymark and Janet N. Stone..
(2) Includes 504,601 shares-(16.4%) held in a trust of which Mr. Nnymark, his son Ronald L.-Naymark, his daughter Janet N. Stone and Jules Pearlman are trustees, and Mr. Naymark and'others are the bene-ficiaries. Also includes 225,000 shares (7 3%) held in a trust of which Mr. Naymark, his son Ronald L. Naymark and Jules Pearlman are trustees, and Ronald L. Naymark and his wife are the beneficiaries. (See footnote 5 below). With respect to such shares, Mr. Naymark shares-voting and investment powers with the other trustees. Mr. Naymark holds sole voting and investment power with respect to the other 4,156 shares. (3) Subject to community property laws of California, Mr. Pashes holds sole voting and investment power with respect to these shares. The number does not include 7,500 shares (0.2%) held of record by Rose Marie Pashos, wife of Thomas J. Pashos. (4) Includes 26,625 shares (0.86%) held by Mr. Lingarelter as custodian for-a minor son and with respect to which he holds, as such custodian, sole voting and' investment power. -Also includes 376,290 shares (12.2%) held by Mr. Lingarelter in his name over which he holds sole voting and investment power subject to community property laws of the State of California. (5) Includes 9,315 shares (0 3%)-held by Mr. Naymark and his wife as trustees o- as a custodian for their minor sons'and 225,000 shares (7 3%) held in a revocable trust of which Mr. Naymark, his father Sherman Naymark and Jules Pearlman are trustees and he and his wife
-are beneficiaries. Also includes 504,601 shares (16.4%) held in a trust of which Mr. Naymark, his father, Sherman Naymark, his sister
. Janet N. Stone and Jules Pearlman 'are trustees and Sherman Naymark and-others are beneficiaries. (See footnote 2 above). With respect to the shares held in trust Mr. Naymark shares voting and investment power
-with the'other trustees. Also includes 31,656 shares (1.0%) with respect to which Mr. Naymark holds sole voting and investment power.
-Does not' include 7,869 shares (0.25%) held of record by Janice I.
Naymark wife of Ronald L. Naymark. (6) Consists of the 504,601 shares and the 225,000 shares held in the trusts referred to in footnotes (2) and (5) above of which Mr. Pearlman is a trustee and with respect to which he shares voting and investment powers with the other trustees.
- i (7) Includes 16,312 shares (0 53%) held in trust by Mrs. Stone and
.her husband Peter Stone-as-trustees for their minors sons. Also
-includes 504,601 shares (16.4%) held in a trust of which Mrs. Stone, l
har father Sherman Naymark, her brother Ronald L. Naymark and Jules Pearlman are trustees and of which Sherman Naymark and others are the bsneficiaries. -(See footnote 2 above)- With. respect to the shares held'in trust, Mrs. Stone shares voting and investment power with the other trustees. Also includes 42,885 shares (1.4%) with respect to-which Mrs. Stone holds. sole voting and investment power and 3,000 p shares (0.1%) held'by Mrs. Stone and her husband Peter Stone in joint tsnancy with respect to which both joint tenants can exercise sole voting and' investment powers. Does not include 7,260 shares (0.24%) hold of record by Peter Stone, husband of. Janet Stone. Collectively,. Messrs. Sherman Naymark, Thomas J. Pashos, John W. Lingarelter and Ronald L'. Naymark, together with their associates, own < or control approximately 56% of the outstanding shares of Common' Stock. Such individuals or any combination of them may be considered to be associates. Subsidiaries Registrant has three operating subsidiary corporations, Quadrex 4 International Corporation organized under.the laws of the State of
. California in February 1972 to provide nuclear power plant services 3
outside the United States-(see previous discussion of Foreign Operations), Michigan Nuclear Services Corporation organiced in May of 1977 under
- .the laws of Michigan, to. provide professional engineering services for a project to.be' performed in Michigan, and Health Physics Systems,
' 'Inc. organized under the laws of the State of Florida in December of 1976 to provide decontamination and radiation waste reduction services and equipment-to the nuclear industry. Registrant owns 100% of the
, outstanding capital stock of such subsidiaries. The financial-statements of1 Nuclear-Services International Corporation and Michigan Nuclear Services Corporation are included in Registrant's consolidated financial
- s tat ement s . . Health Physics Systems, Inc. was acquired through a
- mer6er and an exchange of stock in January of 1980. Its fiscal year ended December 31, 1979 Accordingly, its results of operation are not included in Registrant's consolidated financial statements but
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will be next year. The financial position of HPSI is included in Registrant's consolidated balance sheet as of. January 31,In1980. (See any event, Note neither9 ofthe Notes totaltoassets Consolidated Financia1' of Health PhysicsStatements.) Systems, Inc. nor its revenues nor its net income for its fiscal year ended December 31, 1979 exceeded.10% of the corresponding figures of Registrant for its fiscal; year ended January- 31, 1980. ITEM 5 LEGAL PROCEEDINGS There are no material pending legal proceedings to which Registrant or its subsidiaries are a party or to which any of their property is subject. -Registrant knows of no material legal proceedings contemplated by any governmental authority. Registrant and Nuclear Installation
. .. ~ . - .
p S3rvices Company (NISCO) entered into an agreement settling the previously roported litigation between them. Such settlement resulted in a pcyment of $92,500 to Registrant to be made in two installments of
$55,000 on November 2, 1979 and the other of $37,500 on April 30, 1980.
ITEM 6. INCREASES AND DECREASES IN OUTSTANDING SECURITIES During Registrant's fiscal year ended January 31, 1980, the following changes occurred in the outstanding securities of Registrant. On March 17, 1980 a 3 for 2 split of the Registrant's outstanding common stock became effective. Although this did not occur during the fiscal year ended January 31, 1980, the number of shares set forth
. bolow have been adjusted to reflect the split.
Total Secur-aus of Date of Amount of ities Outstanc
- urities Transaction Securities Description of Transaction ing umon stock ----- ----- ---------- 2,858,871 shares (as of 1/31/79) tion stock 1/31/79 46,640 Between January 31, 1979 1/31/80 (Increase) and January 31, 1980 employ-ees of Registrant exercised options to purchase 13,161 shares of common stock pre-viously granted under Regis- ,
trant's Employee Stock Pur-chase Plan and options to purchase 33,479 shares of common stock previously granted under Registrant's Nonstatutory Stock Option Plan. A Regis-tration Statement on Form S-8 with respect to the issuance of shares under such Plans became effective on 6/27/79 The Company received $32,873 45 in net proceeds on exercise of the options under the Employee Stock Purchase Plan and $4,463 80 l in net proceeds on exercise of the options under the Nonstatutory Stock Plan. All net proceeds were added to the Company's working capital. 1 l t
1/15/80 133,941 On January 15, 1980 the 3,039,452 (Increase) acquisition of Health shares (as.of Physics Systems, Inc. 1/31/80) became effective. On such date each outstanding share of Health Physics Systems, Inc. common stock was converted into 1.145775 shares of Registrant's common stock (0 76385 shares prior to adjustment for the split). . ions to ----- ----- ---------- 24,079 (as
- chaso of 1/31/79' unon stock
.ntcd under
- is trant 's
~2 Qualified ick Option .n 1/31/79 21,079 Shares subject to options 3,000 (as of 1/31/80 (Decrease) cancelled during year 1/31/80),
- ions-to ----- ----- ---------- 38,560 (as of
'chaso 1/31/79) Unon stock inted under
- 10trant's J1oyOO Stock
?chaso Plan 1/31/79 23,088 Shares subject to options 1/31/80 (Increase) granted during year. 1/31/79 12,526 Shares subject to options 1/31/80 (Decrease) cancelled during year 13,161 Shares subject to options 35,961 (as or 1/31/79 1/31/80 (Decrease) exercised during year 1/31/80)
----- ---------- 75,336 (as of tions to -----
rehaso- 1/31/79) amon stock anted under gistrant's nstatutory ock Option an
1 1/31/79 27,102 Shares subject to options 1/31/80 (Increase) granted during year 1/31/79 6,792 Shares subject to options 1/31/80 (Decrease) cancelled during year 62,167 1/31/79 33,479 Shares subject to options (as of 1/31/80 (Decrease) exercised during year 1/31/80)
>missory ----- ----- ---------- $1,214,625 99
- o Sacured (as of 1/31/
D;cd of 1979) is t . 1/31/79 $19,108 33 During the fiscal year $1,195,517.66 1/31/80 (Decrease) Registrant made the (as of 1/31/ payments required 1980) by the note referred to above. Payments were applied first to interest and the balance to reduce the principal amount of the indebtedness leaving a principal balance of
$1,195,517.66 at year end.
ITEM 7 CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR REGISTERED SECURITIES NONE, ITEM 8. DEFAULTS UPON SENIOR SECURITIES NONE ITEM 9 APPROXIMATE NUMBER OF EQUITY SECURITY HOLDERS l As of January 31, 1980, the approximate' number of holders of record of each class of equity securities of Registrant were as follows: Approximate Number Title of Class of Record Holders Common stock 1,374 ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS NONE l l ! l
EXECUTIVE OFFICERS OF THE REGISTRANT Name Position AJ yt SHERMAN NAYMARK President 59 THOMAS J. PASHOSL Senior Vice President 61 JOHN W. LINGAFELTER Senior'Vice President 52 ROBERT'H.-DEMPSEY Senior Vice President 58 JOSEPH-F. CERNY- Secretary and Treasurer 45 There are no family relationships among the foregoing. Messrs. Naymark, Pashos and Lingafelter are also Directors of the Company.
. All_ officers are elected or appointed by the Registrant's Board of Directors and serve at its discretion and until successors are elected or appointed. Sherman.Napnark has served continuously as the Registrant's President since the Registrant's incorporation-in December, 1969 Thomas J. Pashos and John W. Lingarelter served continuously as Vice ,
Presidents of Registrant from the-Registrant's incorporation in December, 1969, until February 28, 1977, at which time Messrs. Pashos and Lingsfelter-were appointed Senior Vice Presidents of the Registrant. They continue to' serve in such capacities. ,
; Thomas J. Pashes and John W. Lingarelter also served continuously as Treasurer and Secretary, respectively, of Registrant from its incorporation in December, 1969 until October of 1974 at which time-
- Mr? Pashos and Mr. Lingarelter-resigned such offices and Joseph F.
Corny was elected as both Secretary and Treasurer of Registrant. Mr. t Corny has served continuously in such capacities since his-election. Robert H. Dempsey became an employee of the Registrant on April 28, 1975 and shortly thereafter was elected a Vice President.of the corporation and has served as-such since his election. Sherman Naymark has specialized in the. design, construction and operation of nuclear power plants for more than 30 years. As stated
.nbove, he has served as Registrant's President since the Registrant-was founded in December, 1969
- Thomas J.-Pashos has also been involved in the nuclear industry for more than-25 years.. He served as a Vice President of Registrant responsible for its engineering work from Registrant's incorporation until March of 1977.- At such time Mr. Pashos became a Senior Vice
-President responsible-for the Company's technical efforts.
I
~_ __ _ _. . _
x . . John W. Lingarelter has been in the nuclear business for his ontire professional career. He served as a Vice President or Senior Vice President of' Registrant from the date of Registrant's incorpor-ation. Mr. Lingarelter was responsible for Registrant's technical services work from Registrant's incorporation until March of 1975 At such time Mr. Lingafelter became responsible for Registrant's marketing activities. In March of 1977, Mr. Lingarelter became a Senior vice President responsible for-the Company's foreign operations.
. Robert.H. Dempsey has been involved in the nuclear industry for more than 20-years. He-has worked in the nuclear departments of
! . General Electric Company, Westinghouse Electric Corporation and Gulf ' General Atomics. He was employed by Registrant in April of 1975 i~ Prior to joining Registrant,.Mr. Dempsey was employed for approximately 2 years with General Atomics Corporation as Manager, Customer Service. As a Vice President, Mr. Dempsey is currently. responsible for the ! Company's plant construction and operation services. Joseph F. Cerny has been an accountant for all of his profess-ional career. He was employed by Registrant in May of.1972 and prior to his appointment as Secretary and Treasurer of Registrant he acted as Registrant's Controller. During the fiscal year ended January 31, 1980, Greenfield A. Randall, J r. also served as an officer of the Company. Mr. Randall.became an i cmployee of the Company in January of 1971 and was elected as a vice President in February of 1977 He served as such until his resignation from the Company in March of 1980. Mr. Randall left the employ.of the 4 Company voluntarily to take employment elsewhere. ITEM 11. INDEMNIFICATION OF DIRECTORS AND OFFICERS There are no. provisions of Registrant's Articles of Incorporation l or Bylaws relating to indemnification of its directors or officers.
- Registrant has purchased a Directors and Officers Liability and Corporation Reimbursement insurance policy. The policy has an aggregate coverage limitation of $1,000,000 per policy year with a $5,000 deductible provision per loss. The annual premium of $2,645 has been paid to July 28, 1980. Within the policy limits, the policy pays amounts directors and officers are legally obligated to pay for claims arising
'from any breach of duty, neglect, error etc. solely by reason of their being directors or_ officers. The policy, among other exclusions, excludes-coverage for (1) fines or penalties imposed by law, (ii) <
other matters which may be d"remed uninsurable at law, (iii) claims for
- libel and slander, (iv) claias for illegally acquired personal profit, (v) claims for return of remuneration paid without prior shareholder approval,-(vi) cla'ims for profits under Section 16(b) of the Securities
- Exchange Act of 1934, and (vii) claims caused by active and deliberate j dishonesty. The policy also reimburses the Registrant for amounts Registrant is required or permitted by law to pay a director or officer for indemnification of_ claims made against the director or officer for wrongful' acts in their respective capacities. Both with respect to j .the_ directors and officers liability coverage and the Company reimbursement l
l t l
- . L _
coverage, the insurer's obligation extends to 100% of the amount of the incurred loss in excess of the deductible which is applied separately to each claim. Registrant has no contractual obligation with any of its directors and officers to indemnify them. Section 317 of the califorria corpora-tions Code provides that a corporation may indemnify a director, officer, employee or other agent against expenses, fines, judgments, cettlements and other amounts actually and reasonably incurred by him in connection with suits or proceedings brought or threatened to be brought against him (other than a suit etc. brought by, or in the right of, the corporation) by reason of his position, if he acted in good faith ano in a manner reasonably believed to be in the best interests of the corporation and, in the case of criminal proceedings, had no reasonable cause to believe that the conduct was unlawful. The law also provides that with respect to a suit by or on behalf of the corporation, a director, officer, etc., may be indemnified against expenses actually and reasonably incurred by him, if he acted in g ,d faith in a manner he reasonably. believed to be in the best interests of the corporation and with cuch care as an ordinary prudent man would use under similar circumstances; provided no indemnification is permitted in such suits; (a) With respect to any claim, issue or matter as to which such person is adjudged to be liable to the corporation in the perfor-mance of such person's duty to the corporation, unless and to the extent that the court in which the action was brought determines that, in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for expenses in an amount which the court determines; (b) Of amounts paid in settling or otherwise disposing of a threatened or pending action, with or without court approval; or (c) Of expenses incurred in defending a threatened or pending action which is settled or otherwise disposed of without court approval. The law further provides that to the extent that a director, officer, etc., has been successful on the merits in defense of the suit or claim, he shall be indemnified against expenses actually and reasonably incurred by him. Any other indemnification shall be made only upon a determination that he has met the applicable standard of conduct set forth in the law. Such determination shall be made by a majority vote of a quorum of disinterested directors, the approval of shareholders (excluding the claimant's vote) or by the court in which the proceeding was pending. ITEM 12. FINANCIAL STATEMENTS, EXHIBITS FILED AND REPORTS ON FORM 8-K (a)(1) Financial Statements
4 CONSOLIDATED FINANCIAL STATEMENTS: , The consolidated financial statements of Quadrex Corporation and cubsidiaries and related notes as of January 31, 1980 and 1979, together , with the report thereon of Arthur Andersen & Co., independent public occountants, included in the Annual Report of the Company for the year onded January 31, 1980, are incorporated herein by reference. FINANCIAL STATEMENTS OMITTED:- Separate financial statements of the parent company have been 4 omitted since.it is primarily an operating company and there is no
~
minority interest in subsidiaries, nor do the subsidiaries have long-term debt in excess of 5% of consolidated total assets. SCHT.DULES FOR THE TWO YEARS ENDED JANUARY 31, 1980, SUPPORTING THE
-CONSOLIDATED-FINANCIAL STATEMENTS:
Schedule Number II Amounts Receivable from Underwriters, Promoters, Directors, Officers, Employees and Principal Holders (other than affiliates) of Equity Securities of the Person and its Affiliates. V Property, Plant and Equipment < VI Accumulated Depreciation, Depletion and Amortization of Property, Plant and Equipment VII Intangible Assets, Preoperating Expenses and
- Similar Deferrals XII Reserves XVI Supplementary Income Statement Information Schedules I-XIX not listed above have been omitted because the matter or conditions are not present or the information required to be set forth therein is included in the consolidated financial statements or notes thereto.
(a)(2) Exhibits
- 1. Copy of Certificate of Incorporation of Health Physics Systems, Inc. and copy of Amendment to Articles of Incorporation of. Health Physics Systems , Inc.
- 2. Copy of Bylaws of Health Physics Systems, Inc. ,
3 Copy of Amendment of Articles of Incorporation of Registrant with respect to 3 for 2 split.
- 4. Copy of amendment to Registrant's Non-Statutory Stock Option Plan.
5 Copy of amendment to Registrant's Employee Stock Purchase Plan. l
.. . ._ .. ___ . . - , _ . ~
. I l
.1
- 6. Copy of Notice of Annual Meeting of Shareholders '
and Proxy Statement for the annual meeting of Registrant's shareholders on June 12, 1979 7 Copy of Notice of Special Meeting of Shareholders and Proxy Statement for the special meeting of Registrant's shareholders to be held on June 10, 1980.
- 8. Registrant's Annual Report to Shareholders for its
. fiscal year ended January 31, 1980.-
9 Copy of Certificate of Amendment to Articles of: Incorporation of Nuclear Services International Corporation changing its name to Quadrex International Corporation. (b) Reports on Form 8-K During the last quarter of the Registrant's fiscal year ended January 31, 1980, Registrant filed two reports on form 8-K with the Securities and Exchange. Commission. These reports, dated Nove=ber 30, 1979 and January 25, 1980, dealt with events of November 14, 1979 and January 15, 1980 respectively. Both reports were submitted with. respect to the acquisition.of Health Physics Systems, Inc. The November 1979 report set forth the general terms of the acquisition agreements and the January 1980 report reported the consummation of the acquisition. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SUPPORTING SCHEDULES In. connection with our examination of the consolidated financial statements included in the Company's annual report to stockholders filed with this Form 10-K, we have'also examined the supporting schedules listed on the previous page. In our opinion, these schedules present fairly, when read in conjunction with the related financial statements, the financial data required to be set forth therein, in conformity with generally accepted accounting principles applied on a consistent basis.
/s/ Arthur Andersen & Co.
ARTHUR ANDERSEN & CO. San Jose,_ California, March 5 , 1980 Information called for by Part II of Form 10-K is omitted since. the' Registrant will file not later than 120 days after the close of its fiscal year with the Commission a definitive proxy statement pursuant to Regulation 14A. s SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Socurities Exchange Act of 1934, the Registrant has duly caused this report'to be signed on its behalf by the undersigned, thereunto duly cuthorized. - QUADREX CORPORATION (Registrant) By: /s/ Sherman Naymark SHERMAN NAYMARK, President Dated: April 29, 1980 4 e I
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