PRESS RELEASE - APRIL 17, 2003
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TRANSTECH INDUSTRIES, INC. REPORTS RESULTS FOR THE
YEAR ENDED DECEMBER 31, 2002 AND THE
RESTATEMENT
OF EARNINGS FOR THE FIRST THREE
QUARTERS OF 2002
PISCATAWAY, N.J., April 17, 2003 - Robert V. Silva, President and Chief
Executive Officer of Transtech Industries, Inc. (OTC BULLETIN BOARD: TRTI)
announced the results of operations for the year ended December 31, 2002. The Company’s subsidiaries perform
environmental services and generate electricity utilizing methane gas as fuel.
Gross revenues of
the environmental services segment for the year ended December 31, 2002 were
$1,306,000 versus $1,370,000 for 2001.
Revenues for the electricity generation segment for 2002 were $70,000
versus $1,000 for 2001. Deferred
repairs to the electricity generation equipment began in May 2002. Net consolidated revenues (after the
elimination of inter-company environmental services sales) were $737,000 for
2002 compared to $730,000 for 2001.
Net cost of
operations for the year ended December 31, 2002 and 2001 were $2,782,000 and
$1,460,000, respectively. The cost
increase was primarily due to charges totaling $950,000 for the write-off of
certain receivables, and an increase in professional and legal fees. The remaining cost increase was due
primarily to increased equipment repair, insurance and personnel costs.
Other income for the year ended
December 31, 2002 was $8,540,000 versus a net expense of $211,000 for
2001. Other
income for 2002 includes $8,626,000 of proceeds received from the Company's
settlement of litigation against certain of its excess insurance carriers,
discussed below, net of related legal fees and a $100,000 payment made pursuant
to a 1998 agreement that became due upon the receipt of such proceeds. Results
for 2002 and 2001 include $337,000 and $375,000,
respectively, of interest expense
accrued on the Company's estimated
federal income tax liability discussed below.
The Company’s provision for taxes for the year ended December 31, 2002 was $2,992,000 versus a credit of $1,356,000 recognized for 2001.
Net
income for the year ended December 31, 2002 was $3,503,000, or $1.18 per share,
versus net income of $415,000 or $0.14 per share for 2001.
During October 2001, the Company settled its
claims against certain excess insurance carriers for recovery of past remediation
costs. The settlement was consummated
in 2002 and resulted in gross proceeds to the Company of $13.0 million. As previously disclosed, the Company agreed
that a party to the 1997 settlement of litigation regarding the allocation of
remediation expenses may claim against such proceeds in accordance with the
terms of the 1997 settlement agreement.
The amount that may be due is in dispute, and the amount in dispute,
$3.5 million, has been placed in escrow.
A portion of the proceeds is also payable to counsel representing the
Company in this and other litigation.
The Company’s initial reported results for
the quarter ended March 31, 2002 and year-to-date results for the quarters
ended June 30 and September 30, 2002 included the funds held in escrow in
“other” income based upon calculations prepared on behalf of the Company which
indicated that no amounts were due to the party under the terms of the 1997
settlement agreement. Management is
still of the opinion that no amounts are due to this party, however, the
outcome of the dispute is less certain given the arbitrator’s initial
interpretations of the agreement.
Therefore, management is now of the opinion that the funds held in
escrow should not be reported as income until the dispute has been settled and
the funds are released from escrow. The
Company will file amendments to the Forms 10-QSB previously submitted for the
periods stated above to reflect the exclusion of the escrowed funds and
corresponding income tax provision from income. The revised net income and net income per share for the stated
periods is provided below.
In October 2000, the Company concluded its litigation with the Tax
Court that it began in 1994. The
resulting assessed tax obligations, estimated at $4.5 million as of December
31, 2002, are now due. The Company is
pursuing a reduction in the amount due, and a payment plan, for these
obligations through the Offer in Compromise procedure. The amount of the Company’s funds remaining
after an immediate payment of the full tax obligations may be insufficient to
satisfy the Company's other contingent obligations and meet its operating
expenses as they come due.
As previously announced, the Company is a defendant in two suits
brought by U.S. Environmental Protection Agency (“EPA”). A suit brought in
November 2001 alleges the Company is the corporate successor to the former
operator at a site, and had continued its operations at the site. EPA is
seeking reimbursement of approximately $2.9 million of response costs. A suit brought in May 2002 against the
Company and other Potentially Responsible Parties (“PRPs”) seeks reimbursement
of $4.2 million of response costs and $18.1 million in penalties related to the
remediation of the Kin-Buc Landfill.
The N.J. Dept. of Environmental Protection (“NJDEP”) initiated a similar
suit regarding Kin-Buc in September 2002, seeking unspecified un-reimbursed
response costs and natural resource damage claims. The Company has been indemnified against the response cost
portion of the Kin-Buc claims pursuant to the aforementioned 1997 litigation
settlement. Also in September 2002, EPA issued a notice to the Company and
other PRPs seeking contribution to an estimated $7.2 million cleanup plan for a
portion of a site in Carlstadt, NJ. The
Company had operated at the site for five years ending in 1970, and had settled
litigation with certain PRPs regarding the allocation of remediation costs
among parties to the suit during 1995.
Work on the
capping plan at the Southern Ocean Landfill in Ocean County, New Jersey was
postponed over the winter months, and is expected to begin again in late April
2003. The remaining work must be
completed by May 31, 2003 unless extended by NJDEP. The capping plan utilized recycled materials where possible to
cover and close a portion of the landfill, and to provide tipping fees to fund
certain tasks of the closure. During
2002, the Company has wrote-off $700,000 of the $1,162,000 owed the Company due
primarily to insufficient tipping fee revenue.
The
Company continues to face significant short-term and long-term cash
requirements for its federal and state income tax obligations, as well as
professional and administrative costs, and remediation costs associated with
sites of past operations. Although the
Company continues to pursue the sale of property held for sale and claims
against non-settling insurance carriers for recoveries of past remediation
costs, no assurance can be given that the timing or amount of the proceeds from
such sources will be sufficient to meet the cash requirements of the Company.
This
news release may contain forward-looking statements as defined by federal
securities laws, that are based on current expectations and involve a number of
known and unknown risks, uncertainties and other factors that may cause the
actual results, levels of activity, performance or achievements to differ
materially from results expressed or implied by this press release. Such risks and uncertainties include among
others, the following: general economic and business conditions; the ability of
the Company to implement its business strategy; the Company’s ability to
successfully identify new business opportunities; changes in the industry;
competition; the effect of regulatory and legal proceedings. The forward-looking statements contained in
this news release speak only as of the date of release; and the Company does
not undertake to revise those forward-looking statements to reflect events
after the date of this release.
Presented
below are revised consolidated balance sheets as of March 31, 2002, June 30,
2002 and September 30, 2002; revised statements of operations for the
quarter ended March 31, 2002 and year-to-date results for the quarters ended
June 30 and September 30, 2002;and
the consolidated balance sheet and statement of operations
for the year ended December 31, 2002.
TRANSTECH INDUSTRIES, INC.
AND
SUBSIDIARIES
2002
CONSOLIDATED BALANCE SHEETS
(In $000's)
Assets
Revised
Mar.31 Jun.30 Sept.30 Dec.31
Cash and cash equivalents $
450 $ 6,728 $ 4,270
$ 3,779
Marketable securities 9,597 2,765 4,760 4,761
Accounts receivable,
Net of reserves
422 421 618 487
Other current assets 375 480 454
437
Total current assets 10,844 10,394 10,102 9,464
Assets held for sale 1,312 1,312 1,312 1,312
Other assets 81 153
211 474
Total assets $12,237 $11,859 $11,625 $11,250
Liabilities and
Stockholders' Equity
Accrued income taxes $ 6,333 $ 6,200 $ 5,944 $ 5,874
Accounts payable and other
current liabilities 1,440
1,397 1,516 1,484
Total current liabilities
7,773 7,597 7,460
7,358
Accrued remediation and
closure costs
2,057 2,049 2,048
2,091
Other liabilities - - 28 26
Stockholders' equity 2,407 2,213
2,089 1,775
Total Liabilities and
Stockholders' Equity $12,237 $11,859 $11,625 $11,250
TRANSTECH
INDUSTRIES,INC.
AND SUBSIDIARIES
2002
CONSOLIDATED STATEMENTS OF OPERATIONS
(In $000's, except per share data)
For the Three Months For the Six Months
Ended March 31,2002 Ended June 30,2002
Initial Revised Initial Revised
Gross Revenues $ 291 $
291 $ 655
$ 655
Less: Inter-company (153) (153) (285) (285)
Net Revenues 138
138 370 370
Cost of operations 1,143 1,143 1,702 1,702
Income (loss) from
operations
(1,005) (1,005) (1,332) (1,332)
Net proceeds from
insurance claim
12,108 8,608 12,108 8,608
Other income (expense) (46) (46) (52) (52)
Income (taxes) credit (4,459) (3,396) (4,325) (3,262)
Net income (loss) $6,598 $4,161 $6,399 $3,962
Income (loss) per common share:
Net income (loss) $ 2.21 $ 1.40 $ 2.15 $ 1.33
Number of shares used in
calculation 2,979,190 2,979,190
2,979,190 2,979,190
For the Nine Months For the Year Ended
Ended Sept. 30,2002 December 31,
Initial Revised 2002 2001
Gross Revenues $1,039 $1,039
$1,376 $1,371
Less: Inter-company (432) (432) (639) (641)
Net Revenues 607
607 737 730
Cost of operations (a) 2,247 2,247 2,782 1,460
Income (loss) from
operations
(1,640) (1,640) (2,045) (730)
Net proceeds from
insurance claim 12,126 8,626 8,626 -
Other income (expense) (b) (58) (58) (86) (211)
Income (taxes) credit (4,214) (3,151) (2,992) 1,356
Net income (loss) $6,214 $3,777 $3,503 $ 415
Income (loss) per common share:
Net income (loss) $ 2.09 $ 1.27 $ 1.18 $ 0.14
Number of shares used in
calculation
2,979,190 2,979,190 2,979,190
2,943,848
(a) - Cost of operations for 2002 includes a charge of $700,000 for the write-off of certain trade receivables.
(b) Other income (expense) for 2002 and 2001 include charges of $337,000 and $375,000, respectively, for interest expense accrued on the Company's estimated federal income tax liability.
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