The nuclear services industry consists of a broad range of engineering, technology-based and operational services provided to support the former and ongoing nuclear weapons production complexes for government entities and to support commercial nuclear power generation and other non-government entities, such as hospitals, pharmaceutical companies, research laboratories, universities or research reactors and industrial facilities that use nuclear-based equipment and services throughout the nuclear fuel cycle.

Federal nuclear services consist of services provided to government entities (primarily the Department of Energy, or DOE, and, to a lesser extent, the Department of Defense, or DOD) related to management and operation, or M&O, services, complex decontamination and decommissioning, or D&D, and clean-up of radioactive materials at both operational and former weapons production sites. Over the past six decades, the DOE developed one of the largest government-owned industries in the United States, responsible for research, development, testing, operations and production of nuclear weapons and a variety of nuclear-related research programs.

The services that the Company provides to its government customers include the on-site characterization, sorting, segregation, transportation, management and disposal of classified and unclassified solid and liquid LLRW, MLLW and other special wastes. The Company also performs D&D and demolition of facilities, including disposal of radioactive materials. In 2006, the Company safely managed, stored, processed and disposed over one billion pounds of solid and over 100 million gallons of liquid LLRW and MLLW from the government sites that it services.

The Company provides a broad range of on-site services to commercial customers, including commercial power and utility companies that operate nuclear power plants, pharmaceutical companies, research laboratories, universities, industrial facilities and other entities that generate radioactive materials or are involved in the nuclear services industry. The Company’s services include D&D, project planning, site surveys, radioactive material characterization and management, liquid waste processing, spent nuclear fuel services, emergency response and other nuclear services.

The Company provides a broad range of logistics, processing and disposal services and owns and operates strategic facilities for the safe processing and disposal of radioactive materials. The Company’s processing and disposal facilities include disposal facility in Clive, Utah, which is the largest privately-owned LLRW disposal site in the United States, three processing facilities in Tennessee and separate processing and disposal facilities in Barnwell, South Carolina. The Company operates the Barnwell disposal facility pursuant to a long-term lease with South Carolina.

The Company’s transportation and logistics services encompass all aspects of transporting radioactive materials, including obtaining all required local and federal licenses and permits, loading and bracing shipments, conducting vehicle radiation surveys and providing transportation assistance to other companies throughout the United States. Through its subsidiary, the Company owns and operates a dedicated fleet of tractors, trailers and shipping containers for transporting radioactive materials and contaminated equipment for processing and disposal.

Cost of revenues increased $93.5 million, or 69.4%, to $228.3 million for the year ended December 31, 2006 from $134.8 million for the year ended December 31, 2005.

Gross profit decreased $36.5 million, or 15.5%, to $198.8 million for the year ended December 31, 2006 from $235.3 million for the year ended December 31, 2005.

Interest expense increased $18.8 million, or 37.9%, to $68.6 million for the year ended December 31, 2006 from $49.7 million for the year ended December 31, 2005.

Net income decreased $103.7 million, or 75.1%, to $34.4 million for the year ended December 31, 2006 from $138.1 million for the year ended December 31, 2005.