EXHIBIT 99
NEWS RELEASE
For Immediate Release / July 28, 2003
Contact: Chad Hyslop or Jim Baumgardner (208) 331-8400
info@americanecology.com www.americanecology.com
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AMERICAN ECOLOGY POSTS $2.0 MILLION 2ND QUARTER PROFIT
CORE DISPOSAL BUSINESS DRIVES EARNINGS
BOISE, Idaho - Jim Baumgardner, Senior Vice President and Chief Financial
Officer of American Ecology Corporation [NASDAQ: ECOL], today announced
financial results for the three and six months ending June 30, 2003. For the
quarter ended June 30, 2003, the Company reported net income of $2.0 million or
$0.11 per fully diluted share, compared to net income of $2.1 million or $0.12
per diluted share for the quarter ending June 30, 2002. Income from continuing
operations for the second quarter reached $2.7 million, exceeding income from
continuing operations of $2.6 million for the same period last year.
Revenue from continuing operations reached $12 million during the second quarter
2003, a 13% increase over the $10.6 million reported for the same quarter last
year. Steady revenue growth at the Company's Grand View, Idaho disposal facility
and a strong quarter at its Richland, Washington disposal facility accounted for
the increase. Revenue from continuing operations for the first six months of
2003 reached $22.8 million compared to $24.0 million for the first six months of
2002. Slightly lower year-to-date revenue reflects a large event project handled
by the Richland site in the first quarter last year, which was not replaced in
the first six months of 2003.
"The Company's strong second quarter financial performance demonstrates the
earnings strength of our Idaho and Washington facilities," Baumgardner noted,
adding "The Grand View, Idaho site continued to increase niche business disposal
volumes despite a generally weak economy and highly competitive conditions in
the nation's traditional hazardous waste disposal market."
For the first half of 2003, the Company reported a net loss of $15.2 million or
($0.94) per fully diluted share, compared to net income of $17.9 million or
$1.14 per diluted share for the same period last year. A series of large
one-time events in the first half of both years drove this large swing in
reported earnings. In the first half of 2002, the Company recognized a
cumulative effect gain of $13.1 million in implementing SFAS No. 143, a new
accounting standard governing disposal site closure obligations, and also
recognized revenue and earnings from the previously mentioned Richland event
project. In the first half of 2003, the Company wrote off $21 million following
an adverse trial court ruling in its Ward Valley damages claim, expensed $1.8
million in legal fees associated with Ward Valley litigation, posted a $5
million gain from the sale of its former El Centro municipal waste landfill, and
expensed an additional $2 million for discontinued operations in Oak Ridge,
Tennessee.
Selling, general & administrative expenses (SG&A) for the second quarter
increased to $3.3 million, or 27% of revenue compared to $2.2 million, or 20% of
revenue in the same quarter last year. This increase primarily reflects $300,000
in Ward Valley litigation costs in Q2 2003 and a series of unusual reductions or
credits to SG&A in Q2 of 2002, including
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recovery of previously paid legal fees, a franchise tax refund, and reversals of
accruals for legal matters. For the six months ending June 30, 2003 SG&A was
$7.8 million or $2.0 million higher than the same period in 2002.
Unreserved expenses to remove and dispose of remaining customer waste and
prepare the Oak Ridge facility for sale reduced second quarter 2003 earnings by
$692,000. However, by July 21, 2003, all customer waste had been safely removed
from the site. During the second quarter, the Company entered into a non-binding
letter of intent with a prospective buyer who is actively undertaking due
diligence to acquire the facility. The buyer's assessment is taking place in
conjunction with radiation surveys and clean-up work following removal of
customer waste. The second quarter Oak Ridge charges also include amounts for
incidental waste generated at the site.
"While the actual cost to remove and dispose of previously accumulated customer
wastes at the Oak Ridge plant proved higher than initially estimated, we are
pleased that this inherently uncertain and difficult task is now behind us,"
President and Chief Executive Officer Stephen Romano stated, adding "We are now
actively engaged in due diligence with a prospective buyer."
In July 2003, the Company was notified by representatives of the Paper Allied
Industrial Chemical and Energy Workers International Union (PACE), AFL-CIO
previously employed at the Oak Ridge, Tennessee plant that the union would
accept the last settlement offer made by the Company to resolve all matters
between the union and the Company, although no definitive agreement has been
executed to date. If executed, the final settlement would be $151,000, which
will be recognized when signed consistent with applicable accounting standards.
In other developments, on June 26, 2003 the Company appealed the adverse March
26, 2003 trial court decision denying its monetary damages claim against the
State of California. This claim stems from California's abandonment of the Ward
Valley low-level radioactive waste disposal project. The Company announced today
that the law firm of Cooley Godward LLP is undertaking its appeal on a fixed fee
plus contingency basis. The Company also today disclosed that it had entered
into an amendment to the Ward Valley Interest Agreement and Assignment with its
previous lender reallocating any proceeds secured through the Ward Valley
litigation. Under terms of the recent agreement, any recovered funds shall first
be allocated to reimburse the Company for past and future legal expenses
incurred in the pending litigation, including any contingency fee payments. Any
remaining monetary recovery would be divided equally between the Company and the
Bank.
The Company also announced today that on July 2, 2003, the U.S. Court of Appeals
for the Federal Circuit dismissed the plaintiff's appeal in Frank Manchak Jr. v.
US Ecology, Inc., a patent infringement case brought against the Company's
Nevada site in 1996. Dismissal of Manchak's appeal followed an October 2002
federal district court ruling granting the Company's summary judgment motion to
dismiss the case.
"Our continued progress to resolve outstanding litigation, exit unprofitable
businesses and reduce liabilities is allowing the Company to focus on its core
waste disposal operations," Romano commented, concluding, "We expect earnings
from continuing operations for the second half of 2003 to exceed first half."
American Ecology Corporation, through its subsidiaries, provides radioactive,
PCB, hazardous, and non-hazardous waste services to commercial and government
customers throughout the United States, such as nuclear power plants, steel
mills, medical and academic institutions and petro-chemical facilities.
Headquartered in Boise, Idaho, the Company is the oldest radioactive and
hazardous waste services company in the United States.
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This press release contains forward-looking statements that are based on our
current expectations, beliefs, and assumptions about the industry and markets in
which American Ecology Corporation and its subsidiaries operate. Actual results
may differ materially from what is expressed herein and no assurance can be
given that the Company can successfully implement its growth strategy, generate
improved earnings, exit or sell its Oak Ridge facility without incurring
additional unreserved costs, or prevail in pending litigation. For information
on other factors that could cause actual results to differ from expectations,
please refer to American Ecology Corporation's Annual Report on Form 10-K and
Quarterly Reports on Form 10-Q filed with the Securities and Exchange
Commission.
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AMERICAN ECOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
($ IN 000'S EXCEPT PER SHARE AMOUNTS)
Three Months Ended June 30, Six Months Ended June 30,
2003 2002 2003 2002
---- ---- ---- ----
(Restated) (Restated)
Revenue $ 12,020 $ 10,605 $ 22,791 $ 24,029
Direct operating costs 6,056 5,841 12,040 12,016
------------- ------------- ------------- -------------
Gross profit 5,964 4,764 10,751 12,013
Selling, general and administrative expenses 3,289 2,207 7,786 5,748
------------- ------------- ------------- -------------
Income from operations 2,675 2,557 2,965 6,265
Investment income 22 16 22 27
Interest expense 38 243 159 508
Loss on write off of Ward Valley facility development costs -- -- 20,951 --
Other income (loss) 93 140 93 (325)
------------- ------------- ------------- -------------
Net income (loss) before income tax, discontinued operations,
and cumulative effect of change in accounting principal 2,752 2,470 (18,030) 5,459
Income tax expense 63 -- 55 --
------------- ------------- ------------- -------------
Net income (loss) before discontinued operations and cumulative
effect of change in accounting principal 2,689 2,470 (18,085) 5,459
Gain from discontinued operations - El Centro Landfill 16 34 4,960 224
(Loss) from discontinued operations - Oak Ridge LLRW Facility (692) (303) (2,029) (704)
------------- ------------- ------------- -------------
Net Income (loss) before cumulative effect of change in
accounting principle 2,013 2,201 (15,154) 4,979
Cumulative effect of change in accounting principle -- -- -- 13,141
------------- ------------- ------------- -------------
Net income (loss) 2,013 2,201 (15,154) 18,120
Preferred stock dividends -- 99 64 197
------------- ------------- ------------- -------------
Net income (loss) available to common shareholders $ 2,013 $ 2,102 $ (15,218) $ 17,923
============= ============= ============= =============
Basic earnings (loss) from continuing operations .16 .16 (1.12) .37
Basic earnings (loss) from discontinued operations (.04) (.02) .18 (.03)
Basic earnings from cumulative effect of accounting change -- -- -- .93
------------- ------------- ------------- -------------
Basic earnings (loss) per share $ .12 $ .14 $ (.94) $ 1.27
============= ============= ============= =============
Diluted earnings (loss) from continuing operations .15 .14 (1.12) .33
Diluted earnings (loss) from discontinued operations (.04) (.02) .18 (.03)
Diluted earnings from cumulative effect of accounting change -- -- -- .84
------------- ------------- ------------- -------------
Diluted earnings (loss) per share $ .11 $ .12 $ (.94) $ 1.14
============= ============= ============= =============
Dividends paid per common share $ -- $ -- $ -- $ --
============= ============= ============= =============
<FN>
Note: Certain reclassifications of prior quarter and previous year-to-date amounts have been made to conform to current
quarter and year-to-date presentation, none of which affect previously reported net income.
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AMERICAN ECOLOGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
($ in 000's except per share amounts)
June 30, 2003 December 31, 2002
--------------- -------------------
ASSETS
Current Assets:
Cash and cash equivalents $ 4,750 $ 135
Receivables, net 9,167 10,460
Income taxes receivable 740 740
Prepayments and other 659 498
Deferred income taxes -- 2,745
Assets held for sale or closure 4,068 10,722
--------------- -------------------
Total current assets 19,384 25,300
Cash and investment securities, pledged 244 244
Property and equipment, net 27,434 26,998
Facility development costs 6,478 27,430
Deferred income taxes 8,284 5,539
Other assets 59 129
Assets held for sale or closure 2,239 1,485
--------------- -------------------
Total Assets $ 64,122 $ 87,125
=============== ===================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long term debt $ 1,455 $ 1,985
Accounts payable 2,697 2,192
Accrued liabilities 3,722 4,166
Accrued closure and post closure obligation, current portion 882 882
Income taxes payable 19 23
Current liabilities of assets held for sale or closure 5,322 7,965
--------------- -------------------
Total current liabilities 14,097 17,213
Revolving line of credit -- 603
Long term accrued liabilities 521 2,372
Long term debt 4,810 5,972
Accrued closure and post closure obligation, excluding current portion 9,479 9,318
Liabilities of assets held for sale or closure, excluding current portion 5,571 5,699
--------------- -------------------
Total liabilities 34,478 41,177
--------------- -------------------
Commitments and contingencies
Shareholders' equity:
Convertible preferred stock, 1,000,000 shares authorized,
Designated as follows:
Series D cumulative convertible preferred stock, $.01 par value,
0 and 100,001 shares issued and outstanding; -- 1
Common stock, $.01 par value, 50,000,000 authorized, 16,965,748
and 14,539,264 shares issued and outstanding 170 145
Additional paid-in capital 54,679 55,789
Accumulated deficit (25,205) (9,987)
--------------- -------------------
Total shareholders' equity 29,644 45,948
--------------- -------------------
Total Liabilities and Shareholders' Equity $ 64,122 $ 87,125
=============== ===================
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