SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission File No. 0-6512
TRANSTECH INDUSTRIES, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 22-1777533
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 Centennial Avenue, Piscataway, New Jersey 08854
(Address of principal executive offices)
(732) 981-0777
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X
No
APPLICABLE ONLY TO ISSUERS INVOLVED
IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the issuer filed all documents and reports required to be filed by
Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities
under a plan confirmed by a court. Yes___ No___
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 2,979,190 shares of common stock,
$.50 par value, outstanding as of March 31, 2003. In addition, at such date,
the issuer held 1,885,750 shares of common stock, $.50 par value, in treasury.
Transitional Small Business Disclosure Format
(Check One): Yes No X
Page 1 of 40 pages
Exhibit index on page 37
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
FORM 10-QSB
FOR THE QUARTERLY PERIOD ENDED March 31, 2003
I N D E X
Page(s)
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets as of March 31,
2003 and December 31, 2002 3 - 4
Consolidated Statements of Operations for the 5
Three Months Ended March 31, 2003 and 2002
Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 2003 and 2002 6 - 7
Notes to Consolidated Financial Statements 8 - 15
Item 2. Management's Discussion and Analysis of
Financial Condition or Plan of Operation 16 - 29
Item 3. Controls and Procedures 29
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 30
Item 2. Changes in Securities 30
Item 3. Defaults Upon Senior Securities 30
Item 4. Submission of Matters to a Vote of
Security Holders 30
Item 5. Other Information 30
Item 6. Exhibits and Reports on Form 8-K 31
SIGNATURES AND CERTIFICATIONS 32 - 36
EXHIBIT INDEX 37
EXHIBITS 38 - 40
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
(In $000's)
ASSETS
March 31, December 31,
2003 2002
(Unaudited) ____________
CURRENT ASSETS
Cash and cash equivalents $ 3,588 $ 3,779
Marketable securities 3,408 4,761
Accounts receivable - trade (net of 469 487
allowance for doubtful accounts of
$2)
Deferred tax asset 44 44
Recoverable closure costs from escrow 293 208
fund
Escrowed proceeds from sale of 123 122
subsidiary
Prepaid expenses and other 81 63
Total current assets 8,006 9,464
PROPERTY, PLANT AND EQUIPMENT
Machinery and equipment 3,098 3,064
Less accumulated depreciation (2,859) (2,850)
Net property, plant and equipment 239 214
OTHER ASSETS
Assets held for sale 1,312 1,312
Other 260 260
Total other assets 1,572 1,572
TOTAL ASSETS $ 9,817 $11,250
See Notes to Consolidated Financial Statements
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Cont'd
CONSOLIDATED BALANCE SHEETS, Cont'd
(In $000's)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
March 31, December 31,
2003 2002
(Unaudited) ___________
CURRENT LIABILITIES
Current portion of long-term debt $ 6 $ 6
Accounts payable 372 366
Accrued income taxes and related
interest 4,883 5,874
Accrued salaries and wages 22 189
Deferred income taxes 10 13
Accrued miscellaneous expenses 995 910
Total current liabilities 6,288 7,358
OTHER LIABILITIES
Long-term debt 25 26
Accrued remediation and closure costs 2,090 2,091
Total other liabilities 2,115 2,117
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $.50 par value, 2,432 2,432
10,000,000 shares authorized:
4,864,940 shares issued
Additional paid-in capital 1,450 1,450
Retained earnings 8,526 8,881
Accumulated other comprehensive income
(loss) 20 26
Subtotal 12,428 12,789
Treasury stock, at cost - 1,885,750 (11,014) (11,014)
shares
Total stockholders' equity (deficit) 1,414 1,775
TOTAL LIABILITIES AND STOCKHOLDERS' $ 9,817 $11,250
EQUITY (DEFICIT)
See Notes to Consolidated Financial Statements
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Cont'd
CONSOLIDATED STATEMENTS OF OPERATIONS
(In $000's, except per share data)
(Unaudited)
For the Three Months Ended
March 31,
2003 2002
NET OPERATING REVENUES $ 115 $ 138
COST OF OPERATIONS
Direct operating costs 71 53
Selling, general and administrative
expenses 384 1,090
Total cost of operations 455 1,143
INCOME (LOSS) FROM OPERATIONS (340) (1,005)
OTHER INCOME (EXPENSE)
Investment income (loss) 49 22
Interest expense (1) -
Interest (expense) credit related to income
taxes payable (77) (83)
Net proceeds from insurance claims - 8,608
Gain (loss) from sale of securities (5) -
Miscellaneous income (expense) 19 15
Total other income (expense) (15) 8,562
INCOME (LOSS) BEFORE INCOME TAXES (CREDIT) (355) 7,557
Income taxes (credit) - 3,396
NET INCOME (LOSS) $ (355) $4,161
INCOME (LOSS) PER COMMON SHARE:
NET INCOME (LOSS) $(.12) $1.40
NUMBER OF SHARES USED IN CALCULATION 2,979,190 2,979,190
See Notes to Consolidated Financial Statements
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Cont'd
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In $000's)
(Unaudited)
For the Three Months Ended
March 31,
2003 2002
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS:
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $ 134 $ 476
Cash paid to suppliers and employees (629) (445)
Interest and dividends received 49 22
Interest paid (1) -
Other income received 19 (85)
Income taxes paid (1,072) -
Proceeds from insurance claims - 9,545
Proceeds from escrow deposit - 100
Net cash provided by (used in)
operating activities (1,500) 9,613
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale and maturity of marketable
securities 1,865 -
Purchase of marketable securities (519) (9,596)
Purchase of property, plant and equipment
(34) -
Long term deposit - -
Net cash provided by (used in)
investing activities 1,312 (9,596)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt (2) (1)
Proceeds from equipment financing - -
Payment of remediation and closure costs (1) (8)
Net cash provided by (used in) financing
activities (3) (9)
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (191) 8
CASH AND CASH EQUIVALENTS AT BEGINNING
OF THE YEAR 3,779 442
CASH AND CASH EQUIVALENTS AT END OF
THE QUARTER $ 3,588 $ 450
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Cont'd
CONSOLIDATED STATEMENTS OF CASH FLOWS, Cont'd
(In $000's)
(Unaudited)
For the Three Months Ended
March 31,
2003 2002
RECONCILIATION OF NET INCOME (LOSS) TO NET
CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES:
NET INCOME (LOSS) $ (355) $ 4,161
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS)
TO NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES:
Depreciation and amortization 9 3
Provision for losses on accounts receivable - 500
Proceeds from escrow deposit - 100
Gain (loss) from sale of securities 5 -
Increase (decrease) in deferred taxes (3) 1,312
(Increase) decrease in assets:
Accounts and notes receivable, -net 18 337
Prepaid expenses and other (18) (5)
Escrowed proceeds from sale of subsidiary (1) (1)
Increase (decrease) in liabilities:
Accounts payable and accrued (164) 1,039
expenses
Accrued income taxes and related interest (991) 2,167
NET CASH PROVIDED BY (USED IN) OPERATING $(1,500) $ 9,613
ACTIVITIES
See Notes to Consolidated Financial Statements
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Cont'd
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003
(Unaudited)
NOTE 1 - FORWARD LOOKING STATEMENTS
Certain statements in this report which are not historical facts or
information are forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934,
and the Private Securities Litigation Reform Act of 1995. These statements
relate to future events or the Company's future financial performance. In some
cases, forward-looking statements can be identified by terminology such as may,
will, should, expect, plan, anticipate, believe, estimate, intend, potential or
continue, and similar expressions or variations. These statements are only
predictions. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, levels of
activity, performance or achievement of the Company, or industry results, to be
materially different from any future results, levels of activity, performance or
achievement expressed or implied by such forward-looking statements. Such
factors 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;
and other factors discussed herein. As a result of the foregoing and other
factors, no assurance can be given as to the future results and achievements of
the Company. All forward-looking statements included in this document are based
on information available to the Company and its employees on the date of filing,
and the Company and its employees assume no obligation to update any such
forward-looking statements. In evaluating these statements, the reader should
specifically consider various factors.
NOTE 2 - BASIS OF PRESENTATION
The accompanying financial statements are presented in accordance with the
requirements of Form 10-QSB and consequently do not include all of the
disclosures normally required by generally accepted accounting principles or
those normally made in the Company's annual Form 10-KSB filing. Accordingly,
the reader of this Form 10-QSB may wish to refer to the Company's Form 10-KSB
for the year ended December 31, 2002 for further information.
The financial information has been prepared in accordance with the
Company's customary accounting practices except for certain reclassifications to
the 2002 financial statements in order to conform to the presentation followed
in preparing the 2003 financial statements. Quarterly financial information has
not been audited. In the opinion of management, the information presented
reflects all adjustments necessary for a fair statement of interim results. All
such adjustments are of a normal and recurring nature except as disclosed
herein.
In preparing financial statements in accordance with generally accepted
accounting principles, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements, and
revenues and expenses during the reporting period. Actual results could differ
from those estimates. See "Part I, Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations" for additional information
regarding the estimates and assumptions the Company makes that affect its
financial statements.
NOTE 3 - MARKETABLE SECURITIES
The Company's marketable securities are classified as available-for-sale
and are carried at fair value as determined by quoted market prices. Unrealized
gains and losses are reported in a separate component of stockholders' equity
until realized. The amortized cost of investments is adjusted for amortization
of premiums and the accretion of discounts to maturity or in the case of
mortgage-backed securities, over the estimated life of the security. Such
amortization is included in interest income. Realized gains or losses from the
sale of marketable securities are based on the specific identification method
and are included in other income. Interest and dividend income is recorded as
earned.
At March 31, 2003, the Company's marketable securities consisted of bond
mutual funds classified as available-for-sale and are carried at their fair
value of $3,408,000 and a cost of $3,378,000, and gross unrealized gains of
$30,000. For the three months ended March 31, 2003, the change in net
unrealized gains included in stockholders' equity was $(6,000). In addition,
for the three months ended March 31, 2003, proceeds from the sale of available-
for-sale securities were $1,865,000. During the three months ended March 31,
2003, the Company realized gross gains of $2,000 and gross losses of $7,000 from
the sale of marketable securities. No realized gains or losses were recognized
for the quarter ended March 31, 2002.
NOTE 4 - TRADE RECEIVABLE
Accounts receivable-trade as of March 31, 2003 and December 31, 2002
includes $422,000 and $462,000, respectively, related to a project at the
Southern Ocean Landfill ("SOLF") in New Jersey. On May 15, 2000 the Company's
capping plan for SOLF was approved by the New Jersey Department of Environmental
Protection ("NJDEP") (the "Capping Plan"). The Capping Plan called for the use
of recycled materials are possible in the implementation of the plan. Tipping
fees generated from the deposit of the recycled materials were paid into an
escrow fund from which the Capping Plan costs are paid. Such escrow account
held $405,000 and $484,000 as of March 31, 2003 and December 31, 2002,
respectively. The Company initially agreed to seek payment for its services and
reimbursement for its costs solely from the escrowed funds generated from the
delivery of recycled materials. One recycled material accounted for 65% of the
initial projected volume of all recycled materials to be deposited at the site.
The availability of this recycled material declined dramatically since the
project was first proposed, and the Company had a limited ability to substitute
materials under the Capping Plan. As a result, the project fell behind schedule
and incurred a disproportionate level of operating expenses relative to tipping
fees generated. The Capping Plan was subsequently modified to (a) eliminate the
capping of the adjoining area and access road, (b) allow additional time in
which to complete the project, (c) allow additional materials to be incorporated
into the Capping Plan in order to provide funding of the additional estimated
project costs, and (d) have the county and state fund certain aspects of the
closure. The Company sought an amendment to the Capping Plan that would permit
the acceptance of recycled materials into an adjacent area beyond December 30,
2002 in order to provide additional funds to the project. The Company was
unsuccessful in obtaining approval of NJDEP and regional authorities of such an
amendment. Therefore, given the projected escrowed funds remaining, the
inability to generate funds from the acceptance of additional material and the
proximity to the expiration of the project, during the year ended December 31,
2002 the Company recorded a bad debt expense of $700,000 in recognition of the
write-off of amounts billed but greater than that expected to be collected for
work on the SOLF project.
NOTE 5 - ESCROWED PROCEEDS FROM INSURANCE CLAIM SETTLEMENT
In conjunction with the 1997 settlement of the litigation related to the
Kin-Buc Landfill, the Company agreed that SCA Services, Inc., an affiliate of
Waste Management, Inc., may make claim to a yet to be determined portion of the
proceeds, net of certain adjustments, arising from the Company's litigation
against its excess carriers. In accordance with the terms of the 1997
settlement, $3.5 million of the Company's settlement proceeds are held in escrow
until the amount of such claim is determined. The Company will recognize income
equal to the amounts of the escrow remaining after payment of amounts due SCA
Services, Inc., if any, in the period such funds are released from escrow. For
further discussion of the SCA Services, Inc. matter, and the litigation of
claims against excess carriers, see Part I, Item 2 Management's Discussion and
Analysis of Financial Condition and Results of Operations - Liquidity and
Capital Resources of this Form 10-QSB.
NOTE 6 - ESCROWED PROCEEDS FROM SALE OF SUBSIDIARY
On March 1, 1996, the Company's wholly-owned subsidiary, THV Acquisition
Corp. ("THV"), sold all of the issued and outstanding stock of Hunt Valve
Company, Inc. ("Hunt") to ValveCo, Inc. A portion of the net cash proceeds of
the sale was placed in an interest bearing escrow account to secure the
Company's indemnification obligations to the purchaser under the purchase
agreement. The escrow will terminate upon the earlier to occur of (i) the
release of all funds from escrow in accordance with the terms thereof or (ii)
the later to occur of (x) the expiration of the applicable statute of
limitations for the assessment of federal income taxes for all taxable years
with respect to which Hunt was a member of the Company's consolidated tax group
and (y) the satisfaction by the Company of all assessments or other claims by
the Internal Revenue Service (the "Service") for taxes of the consolidated tax
group during such years. No indemnification claims have been asserted. The
escrowed funds with accrued interest income equal $123,000 and $122,000 as of
March 31, 2003 and December 31, 2002, respectively, and are classified as
current in the accompanying balance sheet since it is anticipated that the funds
will be released within twelve months.
NOTE 7 - ASSETS HELD FOR SALE
Assets held for sale consist primarily of real estate which is carried at a
cost of $1,312,000 as of March 31, 2003 and December 31, 2002. The real estate
included in this category consists of approximately 430 acres located in
Deptford, N.J. (including approximately 100 acres upon which the landfill, owned
and operated by the Company's subsidiary Kinsley's Landfill, Inc. is situated).
The Company is actively pursuing the disposition of such property. However,
based upon market conditions for real estate of this type the Company is unable
to determine when such sale(s) will ultimately be consummated. See "Assets Held
for Sale" contained in Part 1, Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital Resources
of this Form 10-QSB regarding property under contract for sale.
NOTE 8 - INCOME TAXES
Accrued income taxes and related interest consists of (a) $370,000 for
federal and state income taxes with respect to the year ended December 31, 2002,
and (b) $4,513,000 for federal and state income taxes, plus interest, with
respect to the Company's tax liability for the years 1980 through 1991.
The provision (credit) for income taxes consists of the following (in
000's):
2003
2002
Provision for operations
Currently payable (refundable):
Federal -
$1,516
State -
568
-
2,084
Deferred:
Federal - 903
State -
409
-
1,312
Total income tax provision (credit) -
$3,396
During October 2000, the Company concluded litigation, which it commenced
in 1994, with the Service in Tax Court over the Company's tax liability for
taxable years 1980-88 and certain issues from taxable years 1989-91. The
Company settled all of the issues before the Tax Court and reached agreement
with the Service on its tax liability for all of the subsequent taxable years
through 1996. The Company has been assessed $905,000 of federal income tax
after taking into account available net operating losses and tax credits. In
addition, the Company estimates that, as of March 31, 2003, approximately
$60,000 of state interest and $3,557,000 of federal interest are owed. State
tax authorities may assert that penalties are owed in connection with the state
tax liability arising from these settlements. The Company will decide whether
to challenge any such state tax penalties if and when they are asserted. The
Company has paid the portion of the assessment related to 1995; $9,000 for
federal taxes and $5,000 for interest. During February 2003 the Company paid
$66,000 of state tax with the filing of amended returns reflecting adjustments
to previously reported income resulting from these settlements with the Service.
The aggregate tax obligation owed as a result of the Company's settlement with
the Service of the Tax Court litigation and subsequent taxable years, excluding
payments toward the obligation, equals approximately $4,593,000 (plus additional
interest accruing from March 31, 2003 until the obligations are settled).
During March 2001, the Company filed an Offer in Compromise with the
Service which requested a reduction in the amount due and permission to pay the
reduced obligation in installments. This offer was rejected by the Service, and
in March 2002 the Company appealed the Service's rejection of its offer. The
Company awaits the Service's response to its appeal.
NOTE 9 - REMEDIATION AND CLOSURE COSTS
The Company and certain subsidiaries previously participated in the
resource recovery and waste management industries. These activities included
the hauling of waste, waste treatment and the operation of three landfills.
Although the landfills are now closed, the Company continues to own two
landfills, and to remediate one of the owned landfills and one landfill
previously leased from a third party, and has both incurred, and accrued for,
substantial costs associated therewith.
The impact of future events or changes in environmental laws and
regulations, which cannot be predicted at this time, could result in material
increases in remediation and closure costs related to the Company's past waste
related activities, possibly in excess of the Company's available financial
resources. A significant increase in such costs could have a material adverse
effect on the Company's financial position, results of operations and net cash
flows.
The Company's accruals for closure and remediation activities equal the
present value of its allocable share of the estimated future costs related to a
site less funds held in trust for such purposes. Such estimates require a
number of assumptions, and therefore may differ from the ultimate outcome. The
costs of litigation associated with a site are expensed as incurred.
As of March 31, 2003, the Company has accruals totaling $11.3 million for
its estimated share of remediation and closure costs in regard to the Company's
former landfill operations, approximately $9.2 million of which is held in
trusts and maintained by trustees for financing of the estimated $11.2 million
required to fund the closure plan related to the landfill in Deptford, New
Jersey owned by the Company's subsidiary, Kinsley's Landfill, Inc.
See "Remediation and Closure Costs" of Part I, Item 2 Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources and Item I of Part II of this Form 10-QSB for a
discussion of certain matters related to the sites of past operations.
NOTE 10 - LEGAL PROCEEDINGS
See Item 1 of Part II of this Form 10-QSB for a discussion of recent
developments with respect to the Company's legal matters.
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Cont'd
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION OR PLAN OF OPERATION
The following discussion and analysis should be read in conjunction with
the Company's Consolidated Financial Statements and related notes, which provide
additional information concerning the Company's financial activities and
condition.
Forward-Looking Statements
Certain statements in this report which are not historical facts or
information are forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934,
and the Private Securities Litigation Reform Act of 1995. These statements
relate to future events or the Company's future financial performance. In some
cases, forward-looking statements can be identified by terminology such as may,
will, should, expect, plan, anticipate, believe, estimate, intend, potential or
continue, and similar expressions or variations. These statements are only
predictions. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, levels of
activity, performance or achievement of the Company, or industry results, to be
materially different from any future results, levels of activity, performance or
achievement expressed or implied by such forward-looking statements. Such
factors 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;
and other factors discussed herein. As a result of the foregoing and other
factors, no assurance can be given as to the future results and achievements of
the Company. All forward-looking statements included in this document are based
on information available to the Company and its employees on the date of filing,
and the Company and its employees assume no obligation to update any such
forward-looking statements. In evaluating these statements, the reader should
specifically consider various factors.
Discussion of Critical Accounting Policies
For a discussion of the Company's critical accounting policies, see the
Company's Annual Report on Form 10-KSB for the year ended December 31, 2002.
Results of Operations
The three months ended March 31, 2003 compared to the three months ended
March 31, 2002
Consolidated revenues by business segment for the three months ended March
31, 2003 and 2002 were as follows (in $000):
2003 2002
Environmental Services $268 $291
Electricity Generation 65 -
Subtotal 333 291
Intercompany (218) (153)
Net $115 $138
Consolidated net revenues for the three months ended March 31, 2003 were
$115,000 compared to $138,000 reported for the same period of 2002.
The environmental services segment provides construction, remedial and
maintenance services at landfills, commercial and industrial sites, and manages
methane gas recovery operations. The environmental services segment reported
$268,000 of gross operating revenues (prior to elimination of intercompany
sales) for the three months ended March 31, 2003 compared to $291,000 for the
period in 2002; a decrease of 8%. Approximately $218,000 or 81% of the
environmental services segment's revenues for the period, compared to $153,000
or 53% for last year, were for services provided to other members of the
consolidated group and therefore eliminated in consolidation. Third party sales
were $50,000 for the period in 2003, compared to $138,000 for the period in
2002. Substantially all the third party sales during 2003 and 2002 were to
three and one customer(s), respectively.
The majority of the third party revenue for the quarter during 2002 relates
to the Company's activities at the Southern Ocean Landfill ("SOLF"), located in
Ocean County, New Jersey. On May 15, 2000 the Company's capping plan for SOLF
was approved by the New Jersey Department of Environmental Protection ("NJDEP")
(the "Capping Plan"). The Capping Plan was limited to the grading and capping
of the 12 acre lined portion of SOLF and grading and capping of a portion of the
adjoining 44 acre unlined landfill area. The Capping Plan called for the use of
recycled materials where possible in the implementation of the plan. Tipping
fees generated from the deposit of the recycled materials were paid into an
escrow fund from which the Capping Plan costs are paid. The Company performs
certain of the above construction activities, sub-contracts other activities and
performs all managerial functions required under the Capping Plan, as well as
acts as SOLF's agent to solicit the recycled materials. The Company had
initially agreed to seek payment for its services and reimbursement for its
costs solely from the escrowed funds generated from the delivery of recycled
materials. One recycled material accounted for 65% of the initial projected
volume of all recycled materials to be deposited at the site. The availability
of this recycled material declined dramatically since the project was first
proposed during 1998, and the Company had a limited ability to substitute
materials under the Capping Plan. As a result, the project fell behind schedule
and incurred a disproportionate level of operating expenses relative to tipping
fees generated. The Capping Plan was subsequently modified to (a) eliminate the
capping of the adjoining area and access road, (b) allow additional time in
which to complete the project, (c) allow additional materials to be incorporated
into the plan in order to provide funding of a portion of the additional
estimated project costs, and (d) provide funding of certain aspects of the
closure by the county and state. The Company has completed capping 10 of the 12
acres requiring a cap, and the related installation of stormwater management and
gas vent systems. Deposits of revenue producing recycled materials at the site
ended during September 2002. Installation of the synthetic liner component of
the cap is temperature sensitive, therefore construction activities at the site
were suspended for the harsh winter months beginning in November 2002. Work on
the remaining tasks is anticipated to restart in May 2003 and is expected to be
completed within two months. The Company sought an amendment to the Capping
Plan that would permit the acceptance of recycled materials into an adjacent
area beyond December 30, 2002 in order to provide additional funds to the
project through the tipping fees charged for the deposit of such materials. The
Company was unsuccessful in obtaining the approval of NJDEP and regional
authorities of such an amendment. Therefore, given the projected escrowed funds
remaining, the inability to generate funds from the acceptance of additional
material and the proximity to the expiration of the project, the Company
recognized a bad debt expense totaling $700,000 during the year ended December
31, 2002 in recognition of the write-off amounts billed but greater than that
expected to be collected for work on the SOLF project. The Company recognized
revenue of $19,000 and $138,000 related to this site during the three months
ended March 31, 2003 and 2002, respectively, and the accounts receivable - trade
related to SOLF as of March 31, 2003 and December 31, 2002, was $422,000 and
$462,000, respectively.
The Company's environmental services segment continues to perform closure
activities on sites previously operated by the Company's subsidiaries. Work
performed on a landfill owned by the Company and located in Deptford, New Jersey
is submitted for reimbursement to an escrow account established to finance the
closure activities at the site. The Company billed such escrow account
approximately $217,000 and $145,000 for services performed during the three
months ended March 31, 2003 and 2002, respectively.
Revenues from the segment which generates electricity using methane gas as
fuel were approximately $65,000 for the three months ended March 31, 2003. No
revenues from this segment were reported for the period in 2002. The Company
elected to begin repairs to the diesel/generating units previously postponed
pending the outcome of negotiations of offers to purchase the electricity
generating operations. Overhauls of certain equipment began in May 2002 in
preparation for the Company's operation of the facility or its ultimate sale.
The Company temporarily curtailed the facility's operations during June 1999 and
operated one unit sporadically since June 2000. The electricity generating
facility consists of four diesel/generating units each capable of generating
approximately 11,000 kWh/day at 85% capacity. Electricity generated is sold
pursuant to a long term contract with a local utility. The contract has three
years remaining. Revenues are a function of the number of kilowatt hours sold,
the rate received per kilowatt hour and capacity payments. The Company sold 1.2
million kWh during the three months ended March 31, 2003. Methane gas is a
component of the landfill gas generated by a landfill site owned by the Company
and located in Deptford, New Jersey. Engineering studies indicate sufficient
quantities of gas at the landfill to continue the operation of the facility for
approximately 9 years. Elements of the landfill gas are more corrosive to the
equipment than traditional fuels, resulting in more hours dedicated to repair
and maintenance than with equipment utilizing traditional fuels.
Consolidated direct operating costs for the three months ended March 31,
2003 were $71,000, an increase of $18,000 or 34% when compared to $53,000
reported for 2002. This increase in direct operating costs is primarily due to
increases in personnel costs and the cost of the repairs and operation of the
electricity generating units and related equipment.
Consolidated selling, general and administrative expenses for the three
months ended March 31, 2003 were $384,000, a decrease of $706,000 from
$1,090,000 reported for the same period in 2002. The decrease in selling,
general and administrative expenses in the period for 2003 is primarily due to a
$500,000 charge in 2002 for the increase in the allowance for doubtful accounts
discussed above, and an approximate $250,000 increase in accrued professional
fees and administrative costs for the research and defense of environmental
claims regarding various sites. Excluding the two charges, selling, general and
administrative expenses equaled $340,000 for the period in 2002. Significant
professional fees and administrative costs continue to be incurred in support of
the Company's ongoing litigation, business development and asset divestiture
efforts (see "Liquidity and Capital Resources - Liquidity").
The Company's consolidated operating loss for the three months ended March
31, 2003 was $340,000 versus $1,005,000 for the same period in 2002, a decrease
of $665,000.
Consolidated investment income was $49,000 for the three months ended March
31, 2003, an increase of $27,000 from $22,000 reported for the comparable period
in 2002. The increase is primarily due to the additional time funds were
available for investment.
Consolidated interest expense was $1,000 for the three months ended March
31, 2003. Interest expense was less than $1,000 for the period in the prior
year.
Interest reported as "Interest (expense) credit related to income taxes
payable" represents the increase or decrease in the amount of interest accrued
on estimated income taxes payable as a result of the Company's tax litigation
referred to below. Interest expense of $77,000 and $83,000 was reported for the
three months ended March 31, 2003 and 2002, respectively.
Net proceeds from insurance claims of $8,608,000 were reported for the
three months ended March 31, 2003 represents the proceeds received from the
Company's October 2001 settlement of litigation against certain of its excess
insurance carriers, less related legal fees and a charge of $100,000 related to
the release of funds previously held in escrow to a former majority shareholder
and former officer and director. Such payment stems from a 1998 settlement
agreement and was contingent upon the Company's settlement of the excess
insurance claims. See "Liquidity and Capital Resources - Insurance Claims for
Past Remediation Costs" for further discussion of these issues.
Loss from the sale of marketable securities was $5,000 for the three months
ended March 31, 2003.
Consolidated miscellaneous income for the three months ended March 31, 2003
and 2002 was $19,000 and $15,000, respectively. Miscellaneous income for the
period in 2003 and 2002 consists primarily of net rental/royalty income received
from the rental and lease of certain of the Company's property.
Provision for income taxes recognized for the three months ended March 31,
2002 equaled $3,396,000. No provision was reported for the three months ended
March 31, 2003.
Consolidated net loss for the three months ended March 31, 2003 was
$355,000 or $(0.12) per share, compared to a net income of $4,161,000 or $1.40
per share, for the three months ended March 31, 2002.
Liquidity and Capital Resources
General
The Company faces significant short-term and long-term cash requirements
for (i) federal and state income taxes and interest which have been assessed and
are now due as discussed below and in the notes to the Company's consolidated
financial statements for the period ended March 31, 2003, (ii) funding
obligations and remediation costs associated with sites of past operations, and
(iii) funding its professional and administrative costs.
As discussed in detail below, the Company and the Internal Revenue Service
(the "Service") have settled all of its issues before the U.S. Tax Court
regarding the Company's tax liability for the years 1980 through 1991, and the
federal and state income tax obligations stemming from the settlements have been
assessed and are now due. The assessed tax obligation has been estimated at
$4.5 million as of March 31, 2003. Although the Company's settlement of its
claims against certain of its insurance carriers for recoveries of past
remediation costs, discussed below, resulted in after-tax proceeds greater than
the amount of the assessed tax obligations, the proceeds remaining after an
immediate payment of the full amount of the tax obligation may be insufficient
to satisfy the Company's other obligations and meet its operating expenses as
they come due. In addition, the Company's past participation in the waste
handling, treatment and disposal industries subjects the Company to future
events or changes in environmental laws or regulations, which cannot be
predicted at this time, which could result in material increases in remediation
and closure costs, and other potential liabilities that may ultimately result in
costs and liabilities in excess of its available financial resources.
The Company continues to pursue the sale of assets held for sale and claims
against non-settling excess insurers, however, no assurance can be given that
the timing and amount of the proceeds from such sales and claims will be
sufficient to meet the cash requirements of the Company as they come due. In
addition, the Company cannot ascertain whether its remaining operations and
funding sources will be adequate to satisfy its future cash requirements.
In the event of an unfavorable resolution of the claims against the Company
by the United States Environmental Protection Agency and SCA Services, Inc.
discussed below, or unfavorable payment negotiations with the Service, or should
the proceeds of asset sales be insufficient to meet the Company's future cash
requirements, including its tax liabilities, then, if other alternatives are
unavailable at that time, the Company will be forced to consider a plan of
liquidation of its remaining assets, whether through bankruptcy proceedings or
otherwise.
Statement of Cash Flow
Cash flow used in operating activities for the three months ended March 31,
2003 increased to $1,500,000 from a source of $9,613,000 when compared to the
prior year due primarily to the receipt in 2002 of $9,545,000 of proceeds from a
settlement of claims against certain of the Company's excess insurance carriers.
Excluding the settlement proceeds, the cash flow provided by operations for the
period in 2002 was $68,000. The primary use of cash during the period in 2003
was the payment of estimated income taxes. Cash flows provided by investing
activities increased this year to $1,312,000 from a use of $9,596,000, due
primarily to the investment in 2002 of the aforementioned proceeds from
insurance claims. The amount reported for 2003 reflects cash utilized for
operations as marketable securities were sold or matured. Cash flows used in
financing activities decreased to $3,000 from a use of $9,000 for the period
last year, due primarily a decrease in landfill closing costs incurred at a site
financed from the Company's general funds. Funds held by the Company in the
form of cash and cash equivalents increased as of March 31, 2003 to $3,588,000
from $450,000.
Working capital surplus was $1.7 million as of March 31, 2003 versus a
surplus of $2.1 million as of December 31, 2002, and the ratio of current assets
to current liabilities was 1.3 to 1 as of March 31, 2003 and December 31, 2002.
Taxes
During October 2000, the Company concluded litigation, which it commenced
in 1994, with the Service in Tax Court regarding the Company's tax liability for
taxable years 1980-91. The Company settled all of the issues before the Tax
Court and reached an agreement with the Service as to its tax liability for all
taxable years through 1996. After taking into account available net operating
losses and tax credits, the Company has been assessed $905,000 of federal income
tax as a result of these settlements. The Company estimates that, as of March
31, 2003, approximately $60,000 of state interest and $3,565,000 of federal
interest are owed. State tax authorities may assert that penalties are owed in
connection with the state tax liability arising from the settlements. The
Company will decide whether to challenge any such state tax penalties if and
when they are asserted. The Company has paid the portion of the assessment
related to 1995; which consists of $9,000 of federal taxes and $5,000 of
interest During February 2003 the Company paid $66,000 of state tax with the
filing of amended returns reflecting adjustments to previously reported income
resulting from these settlements with the Service. The aggregate tax obligation
owed as a result of the Company's settlement with the Service of the Tax Court
litigation and subsequent taxable years, excluding payments toward the
obligation, equals approximately $4,593,000 (plus additional interest accruing
from March 31, 2003 until the obligations are settled).
In March 2001, the Company filed an Offer in Compromise with the Service
requesting a reduction of its tax obligation and permission to pay the reduced
obligation in installments. This Offer was rejected by the Service, and in
March 2002, the Company appealed the Service's rejection of its offer. The
Company awaits the Service's response to its appeal.
Remediation and Closure Costs
As of September 30, 2002, the Company has accrued $11.3 million for its
estimated share of remediation and closure costs related to the Company's former
landfill and waste handling operations. Approximately $9.2 million is held in
trust and maintained by trustees for the post-closure activities of one site
located in Deptford, New Jersey (see Note 9 to the Company's Consolidated
Financial Statements).
The Company and other responsible parties including SCA Services, Inc.
("SCA"), which is an affiliate of Waste Management, Inc. ("WMI"), have provided
funding for the on-going remediation of the Kin-Buc Landfill, located in Edison,
New Jersey, pursuant to an Amended Unilateral Administrative Order issued by the
United States Environmental Protection Agency ("EPA") in September 1990. The Kin
Buc Landfill is owned and was operated by the Company's subsidiary, Kin-Buc,
Inc. ("Kin-Buc"). In November 1992, EPA issued an Administrative Order for the
remediation of certain areas neighboring the Kin-Buc Landfill. The Company and
each respondent to these orders is jointly and severally liable thereunder. On
December 23, 1997, the Company entered into four agreements which settled
lawsuits related to the allocation of costs of remediation. One of the December
23, 1997 agreements provided SCA's commitment to defend and indemnify the
Company from certain future liabilities for and in connection with the
remediation of the site, including an area in the vicinity of the Kin-Buc
Landfill known as Mound B. However, the Company remains a responsible party
under the aforementioned Administrative Orders issued by EPA, and may incur
administrative and legal costs complying with such Administrative Orders.
During May, 2002 the Company and other respondents to the Administrative
Orders were named as defendants to a suit filed by the Office of the US Attorney
in which EPA seeks reimbursement of costs it has incurred and penalties for past
construction delays. During September 2002, the New Jersey Department of
Environmental Protection and New Jersey Spill Compensation Fund filed a similar
suit against the same respondents, seeking reimbursement of past costs it has
incurred with respect to the site and for alleged natural resource damages.
In conjunction with the 1997 settlement of the litigation related to the
Kin-Buc Landfill discussed above, the Company agreed that SCA may make claim to
a yet to be determined portion of the proceeds, net of certain adjustments,
arising from the Company's litigation against its excess insurance carriers.
The amount of such payment, not to exceed $3.5 million, is in dispute and has
been submitted to arbitration for resolution.
During November, 2001 EPA filed suit against the Company alleging that the
Company is the corporate successor to Chemsol, Inc., the former operator at a
Piscataway, New Jersey site owned by Tang Realty, Inc. ("Tang"), and had
continued its operations at the site. Tang is a corporation controlled by
Marvin H. Mahan, a former director and officer, and former principal shareholder
of the Company. Chemsol, Inc. was also affiliated with Mr. Mahan. EPA is
seeking reimbursement of $2.9 million of unallocated remediation costs
associated with the site. The Company is contesting the allegations regarding
successorship and the extent of operations it may have conducted at the site.
No further action has been taken regarding this matter pending the outcome of
settlement discussions.
During September 2002, EPA issued a notice of potential liability and of
consent decree negotiations to potentially responsible parties regarding a site
located in Carlstadt, New Jersey. The site has been undergoing remediation and
EPA now seeks contribution toward the remediation of an area designated Operable
Unit 2. EPA seeks contribution toward estimated remediation costs of this phase
of $7.5 million and $2.0 million of past oversight and administrative costs.
The Company ceased operation of a solvents recovery facility at the site in
1970. This matter is currently under review by the Company and its advisors.
See the section entitled "Insurance Claims for Past Remediation Costs" below for
a discussion of certain claims related to the site.
Insurance Claims for Past Remediation Costs
In 1995, the Company commenced suit (the "Lloyds Suit") against its excess
insurers who provided coverage during the period of 1965 through 1986 to obtain
a recovery of past remediation costs and indemnification for future costs
incurred in connection with the remediation of various sites located in New
Jersey, and for the defense of litigation related thereto. The defendant
insurers, include various Underwriters at Lloyds, London, and London Market
Insurance Companies, First State Insurance Company and International Insurance
Company. The Company had assigned its claims for remediation costs incurred at
a site of past operations located in Carlstadt, New Jersey to certain third-
parties (the "AT&T Group") in conjunction with the 1995 settlement of certain
litigation regarding the remediation costs for such site. Certain of the AT&T
Group members in-turn assigned their rights to the claims to other AT&T Group
members (the "Cooperating PRPs"). During October, 2001 the Company, the
Cooperating PRP Group and certain Underwriters at Lloyds, London, and certain
London Market Insurance Companies (the "London Market Insurers") entered into an
agreement to settle the claims against them (the "Settlement Agreement"). The
Settlement Agreement is intended to be, a full and final settlement that
releases and terminates all rights, obligations and liabilities of London Market
Insurers, the Company and the Cooperating PRP Group with respect to the subject
insurance policies. The Settlement Agreement was consummated in February 2002
when the condition that payments by settling insurers into an escrow account
must represent at least 84.75% of the negotiated value assigned to the claims
was satisfied. The Company's share of the Settlement Agreement proceeds and
interest earned during the collection of the proceeds was approximately
$13,013,000 of which $9,513,000 is reported in the other income section of the
Company's Consolidated Statement of Operation for the period ended March 31,
2002, net of related costs, and $3,500,000 that is held in escrow pending the
outcome of arbitration with SCA Services, Inc. discussed below. The Company
intends to pursue its claims against the non-settling defendants. Some of the
non-settling London and London Market insurance companies are insolvent, however
the estates of some of these insolvent companies have sufficient assets to make
a partial contribution toward claims filed by the Company. The Cooperating PRP
Group shall receive the first $250,000 that is collected from the non-settling
excess insurers, net of attorney fees and expenses, and the Company shall retain
the balance of amounts recovered, if any. Proceeds from the Settlement
Agreement will be subject to federal and state income taxes.
The Company also agreed that a yet to be determined portion of its proceeds
from the Lloyds Suit, net of certain adjustments, may be due to SCA Services,
Inc. in conjunction with the 1997 settlement of the litigation related to the
Kin-Buc Landfill, as discussed above, and to legal counsel representing the
Company in the Lloyds Suit. In accordance with the terms of the 1997
settlement, $3.5 million of the Company's share of the Lloyds Suit settlement is
held in escrow until the amount of such obligation to SCA, if any, is
determined. The Company and counsel representing the Company in the Lloyds Suit
and certain other matters entered into an engagement agreement that contains as
compensation both fixed and contingent fees. The amount of fees due is
dependent in-part upon the outcome of the matters. During 2002, the Company
accrued approximately $837,000 for such fees which are payable at the conclusion
of the litigation on which counsel represents the Company.
All of the policies of excess insurance issued by the defendant insurers
cover Transtech, its present subsidiaries and former subsidiaries, some of which
Transtech no longer controls. Certain companies presently or formerly owned or
controlled by a former principal shareholder, director and officer of the
Company are also covered, however such parties assigned their rights as holders
and claimants under these policies to the Company pursuant to an October 1998
agreement. The 1998 agreement provided, among other terms, for the second of
two payments in the amount of $100,000 each be released from an escrow upon
receipt of proceeds from claims against the excess insurance carriers.
Assets Held for Sale
Assets held for sale consist primarily of real estate which is carried at a
cost of $1,312,000 as of March 31, 2003 and December 31, 2002. The real estate
included in this category consists of approximately 430 acres of predominately
vacant property located in Deptford, N.J. (including approximately 100 acres
upon which the landfill owned and operated by the Company's subsidiary Kinsley's
Landfill, Inc. ("Kinsley's") is situated). The Company had attempted to
maximize the consideration received for the property through the sale or lease
of portions of the Deptford Property as a recycling center/construction and
demolition waste depository. However, discussions with local officials lead the
Company to conclude that such plans are unlikely to be accomplished in the
foreseeable future. The Company is now pursuing the disposition of the property
through the sale of individual parcels and/or groups of parcels. However, based
upon market conditions for real estate of this type the Company is unable to
determine when sale(s) of the parcels will ultimately be consummated and
proceeds received. During May, 2001 the Company entered into a contract to sell
approximately 55 acres adjoining Kinsley's landfill for $2.5 million, assuming
all 55 acres could be utilized for development. During March 2002, the buyer
notified the Company that its due diligence indicated that only between 45 and
48 acres may be developed and certain work on the property may be required, and,
as a result, sought adjustments to the purchase contract. An amendment to the
contract was executed during December 2002 which provided the sale of 60 acres
(45 acres usable land and 15 acres of wetlands) for $2.1 million. The Company
will not be required to make requested improvements to the property. The sale
is contingent upon, among other conditions, the buyer obtaining approval of its
plans for the property from applicable local and state agencies; a process that
may require two or more years to accomplish.
Escrowed Proceeds from Sale of Subsidiary
A portion of the net cash proceeds from the 1996 sale of a subsidiary was
placed in an interest bearing escrow account to secure the Company's
indemnification obligations to the purchaser under the purchase agreement. The
escrow will terminate upon the earlier to occur of (i) the release of all funds
from escrow in accordance with the terms thereof or (ii) the later to occur of
(x) the expiration of the applicable statute of limitations for the assessment
of federal income taxes for all taxable years with respect to which the
subsidiary was a member of the Company's consolidated tax group and (y) the
satisfaction by the Company of all assessments or other claims by the Internal
Revenue Service for taxes of the consolidated tax group during such years. No
indemnification claims have been asserted. During December 2000, the purchaser
agreed to release $841,000 from the escrowed funds to the Company when it became
evident that the income tax liability for the years covered by the escrow were
less than $100,000. The escrowed funds with accrued interest income equal
$123,000 as of March 31, 2003.
THE COMPANY CAN NOT ASSURE THAT THE TIMING AND AMOUNT OF THE NET PROCEEDS
FROM THE SALE OF SUCH ASSETS HELD FOR SALE, THE PROCEEDS FROM THE SETTLEMENT OF
THE REMAINING INSURANCE CLAIMS AND THE ESCROWED PROCEEDS FROM THE SALE OF A
SUBSIDIARY WILL BE SUFFICIENT TO MEET THE CASH REQUIREMENTS OF THE COMPANY
DISCUSSED ABOVE.
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Cont'd
Item 3. CONTROLS AND PROCEDURES
a) Evaluation of disclosure controls and procedures. Based upon their
evaluation as of a date within 90 days of the filing date of this Quarterly
Report on Form 10-QSB, our principal executive officer and principal financial
officer have concluded that our disclosure controls and procedures (as defined
in Rules 13a-14(c) and 15d-14(c) under the Securities and Exchange Act of 1934
(the "Exchange Act")) are effective to ensure that information required to be
disclosed by us in reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in Securities and Exchange Commission rules and forms.
b) Changes in internal controls. There were no significant changes in our
internal controls or in other factors that could significantly affect these
controls subsequent to the date of the evaluation referenced in the preceding
paragraph, including any corrective actions with regard to significant
deficiencies and material weaknesses.
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
As previously disclosed, the Company has been named as a defendant in
litigation related to sites of past operations, specifically the Kin-Buc
Landfill, a Piscataway, New Jersey site owned by Tang Realty, Inc., and a site
located in Carlstadt, New Jersey.
No material developments have occurred with respect to such litigation, or
the other pending legal proceedings involving the Company, subsequent to that
reported in the Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2002. Reference is made thereto for a description of such
litigation, and to the discussion contained in Part I, Item 2 Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources of this Form 10QSB.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
Exhibit 11 - Computation of Earnings (Loss) Per Common Share
Exhibit 99(a) - Certification Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 by Chief Executive Officer
Exhibit 99(b) - Certification Pursuant to 18 U.S.C. Section 1350,as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
by Chief Financial Officer
b) Reports on Form 8-K
The Company filed a current report on Form 8-K dated February 21, 2003 to
announce the sale of the Company's Common Stock from the Company's Retirement
Savings and Profit Sharing Plan.
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRANSTECH INDUSTRIES, INC.
(Registrant)
Date: May 15, 2003 By: /s/ Robert V. Silva
Robert V. Silva, President
and Chief Executive Officer
(Principal Executive Officer)
and
Date: May 15, 2003 By: /s/ Andrew J. Mayer, Jr.
Andrew J. Mayer, Jr.
Vice President-Finance, Chief
Financial Officer and Secretary
(Principal Financial and
Accounting Officer)
CERTIFICATIONS
I, Robert V. Silva, certify that:
1. I have reviewed this quarterly report on Form lO-QSB of Transtech Industries,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules l3a-14 and l5d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 15, 2003
/s/ Robert V. Silva
Robert V. Silva
President and Chief Executive Officer
and Director
(Principal Executive Officer)
CERTIFICATIONS
I, Andrew J. Mayer, Jr., certify that:
1. I have reviewed this quarterly report on Form 1O-QSB of Transtech Industries,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules l3a-14 and l5d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 15, 2003
/s/ Andrew J. Mayer, Jr.
Andrew J. Mayer, Jr.
Vice President-Finance, Chief
Financial Officer, Secretary and
Director
(Principal Financial and Accounting Officer)
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
FORM 10-QSB
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003
EXHIBIT INDEX
EXHIBIT PAGE
NO. NO.
11 Computation of Earnings (Loss) Per Common Share 38
99(a) Certification Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 by Chief Executive
Officer 39
99(b) Certification Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 by Chief Financial
Officer 40