From the Chairman of the Board:
   I am honored to be your Chairman. I decided to join the team for three reasons. First, the quality and commitment of the Board members are excellent. The Board takes an active role in helping management focus on creating shareholder value. Second, Duratek is run on a solid set of values. It is evident in its business processes that these are taken into account in everything that is done. Third, our work is important for our country.
   Your Board is committed to making sure that management is capably executing its responsibilities and will monitor the effectiveness of management’s policies and decisions including the execution of its strategic plan.
    Directors, management, and employees understand that high standards of business conduct, effective corporate governance, sound financial controls, operational integrity, and community engagement is fundamental to sustained business success. I share this commitment and look forward to a bright future for Duratek.

Sincerely,

Admiral Bruce DeMars, Chairman of the Board


From the President and CEO:
   Dedication to our core values brought tangible results in 2004. As I’ve described in past years, our growth strategy involves entering closely related markets where we can offer value-added services, as well as performing on specialized projects that bring higher profit margins. Customers continue to demand more for less. We have improved profitability by continuously discovering smarter ways to do business, inventing new ways to meet the technical challenges of our industry, and improving processes already in use.
   In 2004, we were successful at continuing to implement the strategic objectives of the Company. New business resulted in a 5% increase in revenues during the year that was offset by expected lower revenues on the vitrification project at Hanford as it moved from design to civil construction. We continued to increase our margins, generated cash, and paid down $30 million in term debt.
   This past year also positioned us for growth in our market segments. We introduced new service lines in 2004 that will allow us to grow with our existing customers, as well as capture new ones. The U.S. Department of Energy (DOE) continues to be an opportunity-rich environment with its focus on clean-up and closure of the former nuclear weapons production sites. Duratek’s top priority in 2005 is to continue its strategy for increasing margins, generating cash, and translating new opportunities into revenue growth. Duratek institutionalized an Innovation Program in 2004 that identifies ways we can reduce costs, pioneer new technologies, and improve our bottom line. Our report this year focuses on the introduction and diffusion of an innovative culture throughout the Company.
   Daniel A. D’Aniello, our long-time Chairman, stepped down in 2004, marking the end of nearly a decade of wise and valued guidance from The Carlyle Group. Dan is a man of extraordinary vision and energy. In honor of his work on behalf of Duratek, we named the top two innovation awards after him, so that future recipients will be reminded of the inventive spirit that supported and helped formulate our strategy.
   I am pleased that Admiral Bruce DeMars—a retired four-star admiral in the U.S. Navy and former director of the Naval Nuclear Propulsion Program—has been elected to be the new Chairman of the Board. We are honored that he chose to become part of Duratek. We look forward to innovating together in the years ahead.

Sincerely,

Robert E. Prince, President and CEO