SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number: 0-6512
TRANSTECH INDUSTRIES, INC.
(Name of small business issuer in its charter)
Delaware
22-1777533
(State or other jurisdiction of (I.R.S.
Employer
incorporation or organization)
Identification No.)
200 Centennial Avenue, Suite 202, Piscataway, New Jersey
08854
(Address of principal executive offices) (zip
code)
Issuer's telephone number, including area code: (732) 981-0777
Securities registered pursuant to Section 12 (b) of the Act: None
Securities registered pursuant to Section 12 (g) of the Act:
Common Stock, $.50 par value
(Title of Class)
Check whether the issuer (l) filed all reports required to be
filed by
Section 13 or 15(d) of the Exchange Act 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
Check if no disclosure of delinquent filers in response to
Item 405 of
Regulation S-B is contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive
proxy or
information statements incorporated by reference in Part III of
this Form
10-KSB or any amendment to this Form 10-KSB. [X]
Issuer's revenues for its most recent fiscal year: $730,000
At March 22, 2002 the aggregate market value of the voting
stock of
the registrant held by non-affiliates was approximately $36,689.
At March 22, 2002 the issuer had outstanding 2,979,190 shares
of
Common Stock, $.50 par value. In addition, at such date, the
registrant
held 1,885,750 shares of Common Stock, $.50 par value, in treasury.
DOCUMENTS INCORPORATED BY REFERENCE:
None.
Page 1 of
95 pages
Exhibit Index on
page 34
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
________________
FORM 10-KSB
FOR THE YEAR ENDED DECEMBER 31, 2001
I N D E X
Page(s)
Part I, Item 1. Description of Business 3 - 13
" Item 2. Description of Properties 13 - 14
" Item 3. Legal Proceedings 14 - 21
" Item 4. Submission of Matters to a Vote
of Security Holders 22
Part II, Item 5. Market for Common Equity and
Related Stockholder Matters 23
" Item 6. Management's Discussion and
Analysis or Plan of Operation 23
" Item 7. Financial Statements 23
" Item 8. Changes in and Disagreements
with Accountants on Accounting
and Financial Disclosure 23
Part III, Item 9. Directors, Executive Officers,
Promoters and Control Persons;
Compliance with Section 16(a)
of the Exchange Act 24 - 25
" Item 10. Executive Compensation 26 - 27
" Item 11. Security Ownership of Certain
Beneficial Owners and Management 28 - 30
" Item 12. Certain Relationships and Related
Transactions 30 - 31
Part IV, Item 13. Exhibits and Reports on Form 8-K 32
Signatures 33
Exhibit Index 34 - 38
Part I, Forward Looking Statements.
Certain statements in this report which are not historical
facts or information are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
including, but not limited to, the information set forth herein.
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. Neither the Company nor any other person assumes
responsibility for the accuracy and completeness of these
statements.
Part I, Item 1. Description of Business.
General
Transtech Industries, Inc. ("Transtech") was incorporated
under the laws of the State of Delaware in 1965. Transtech,
directly and through its subsidiaries (Transtech and its
subsidiaries collectively referred to as the "Company"), supervises
and performs landfill monitoring and closure procedures, manages
methane gas recovery operations and generates electricity utilizing
methane gas (see "Continuing Operations" below).
Since 1996, the Company has consisted of the parent company,
Transtech, two operating subsidiaries and 23 inactive subsidiaries.
Transtech is a public holding company which manages its investments
and subsidiaries. The operations of the subsidiaries include an
electricity generation division and an environmental services
division.
At December 31, 2001, the Company employed 15 persons on a
full-time basis.
The Company and the Internal Revenue Service (the "Service")
have settled all of its issues before the US 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, estimated at $4.2 million through December 31, 2001,
exceeds the Company's currently liquid assets. Although the
Company's settlement of its claims against certain excess insurance
carriers for recoveries of past remediation costs (discussed in
Part I, Item 3, Legal Proceedings) received in February 2002,
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. The Company intends to
pursue all opportunities of potential relief with respect to the
payment of the tax obligation afforded it under U.S. tax laws (see
Part I, Item 3, Legal Proceedings).
The Company and certain subsidiaries were previously involved
in the resource recovery and waste management industries. These
activities included the operation of three landfills and a solvents
recovery facility. Although these sites are now closed, the
Company continues to own and/or remediate them and has both
incurred and accrued for the substantial costs associated therewith
(see "Prior Operations" below and Part I, Item 3, Legal
Proceedings). One of the three sites, the Kin-Buc Landfill, has
been undergoing remediation under Administrative Orders issued by
the United States Environmental Protection Agency. The Company
has spent in excess of $19.5 million on remediation and related
costs related to the Kin-Buc Landfill, excluding legal and
administrative expenses.
In order to pay its mounting legal costs and remediation
obligations, from 1986 to 1996, the Company divested a number of
its more significant businesses while the liability for remediation
of waste disposal sites that the Company previously operated were
being sorted-out among the responsible parties through extensive
and complex litigation that involved a developing body of
environmental law. The Company's divestitures included the
Allentown Cement Company in 1988, Cal-Lime, Inc. in 1995, and the
Hunt Valve Co., Inc. in 1996. The Company has also been attempting
to sell most of its dormant real estate. Approximately 569 acres
were sold during 1992, 107 acres were sold during 1997 and an
additional two acres were sold during 1998.
In addition, the Company's past participation in the waste
handling 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 the sale of underperforming operations, however, no
assurance can be given that the timing and amount of the proceeds
from such sales 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.
Continuing Operations
Environmental Services. The environmental services segment
supervises and performs landfill monitoring and closure procedures
and manages methane gas operations. Approximately 47% of the
environmental services segment's gross revenues for 2001, compared
to 45% for the prior year, were from other members of the
consolidated group, and therefore eliminated in consolidation. The
segment contributed greater than 99% to net consolidated revenues
in each of the years ended December 31, 2001 and 2000 after
elimination of intercompany sales. Substantially all third party
sales during 2001 and 2000 were to two and one customer(s),
respectively.
The Company is continuing its efforts to expand the customer
base of the environmental services segment to additional entities
outside the consolidated group. In particular, the Company devoted
significant time and incurred significant professional fees during
1998, 1999 and 2000 in pursuit of a contract and state government
approval to perform the closure of 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 (the "Capping Plan"). The Capping Plan has been 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, and grading and capping of a previously used access
road straddling the lined and unlined landfill areas at SOLF.
Approved activities also include leachate collection and pump
repair, slope stability analysis, stormwater management, gas vent
installation, groundwater monitoring and associated activities.
The Capping Plan calls for the use of recycled materials where
possible in the implementation of the plan. Tipping fees generated
from the deposit of the recycled materials are paid into an escrow
fund from which the Capping Plan costs are paid. The Company shall
perform certain of the above construction activities, sub-contract
other activities and perform all managerial functions required
under the Capping Plan as well as act 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 total
initial volume of all recycled materials to be deposited at the
site. The availability of this recyclable material has declined
dramatically since the project was first proposed, and the Company
has 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 original permit granted to complete the
Capping Plan expired March 15, 2001. Modifications have been made
to the Capping Plan to allow additional time in which to complete
the project, to allow additional materials to be incorporated into
the plan in order to provide funding of a portion of the additional
estimated project costs and to provide funding of certain aspects
of the closure by the county and state. The permit has been
extended to August 31, 2002. The Company may be permitted, at the
sole discretion of the state, to continue accepting materials
beyond August 31, 2002 in order to provide funding of project
expenditures. The estimated cost of the project is approximately
$4.6 million, of which an estimated $1.6 - 1.8 million would be
paid to the Company for its work on the project. The Company
recognized revenue of $728,000 and $703,000 related to this site
during the twelve months ended December 31, 2001 and 2000,
respectively, of which $1,042,000 and $634,000 are included in
accounts receivable at December 31, 2001 and 2000, respectively.
However, there can be no assurance that the Company will be able to
solicit sufficient quantities of recycled material to generate
sufficient funds for reimbursement of the above expenditures, or
payment for the services of the Company. The revenue for 2000
includes billings of $104,000 for a portion of the costs incurred
and expensed in 1998, 1999 and 2000 prior to the award of the
contract.
The environmental services segment continues to perform
closure activities on sites previously operated by the Company's
subsidiaries . Work performed on the Kinsley's landfill is
submitted for reimbursement to a trust account established to
finance the closure activities at the site (see Prior Operations -
Landfill and Waste Handling Operations - Kinsley's).
Electricity Generation. Revenues from operations which
generate electricity utilizing methane gas as fuel represented were
approximately $1,000, or less than 1% of consolidated net revenues
in each of the years ended December 31, 2001 and 2000. The
electricity generating facility consists of four diesel/generating
units each capable of generating approximately 12,240 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 14,000 kwh during the year ended December 31, 2001
compared to 33,000 kwh sold in the prior year. The nominal
quantity of kilowatt hours sold reflects the Company's decision to
postpone repairs to the diesel/generating units pending the outcome
of negotiations of offers to purchase the electricity generating
operations. The contract with the local utility allows for
continuous interruption in electricity supply for a period of up to
twelve months. The Company temporarily curtailed the facility's
operations during June 1999 and has operated one unit sporadically
since June 2000. Methane gas is a component of the landfill gas
generated by a landfill located in Deptford, New Jersey and owned
by the Company's subsidiary Kinsley's Landfill, Inc. ("Kinsley's").
Engineering studies indicate sufficient quantities of gas at the
landfill to continue the operation of the facility for
approximately ten 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.
During 1998, Kinsley's entered into a series of agreements
with Deptford Gas Company, LLC and entities affiliated with it
(together referred herein as ("DGC")), regarding its electricity
generation operations pursuant to which Kinsley's granted DGC the
right to extract and utilize all gas produced at the landfill site,
Kinsley's agreed to purchase gas from DGC, Kinsley's agreed to
operate and maintain the gas collection system and the electricity
generating equipment for the benefit of DGC, Kinsley's agreed to
sell its electricity generating operation to DGC, Kinsley's granted
DGC the right to process its leachate, and Kinsley's agreed to
operate and maintain DGC's leachate processing equipment. DGC
failed to comply with certain conditions of the agreements by their
May 1999 expiration date. The Company and DGC continued
discussions beyond May 1999, but failed to reach agreement on a
transaction similar to that originally contemplated, therefore
during January, 2000 the Company voided all agreements with DGC.
The Company is evaluating several options with respect to the
future operation of the facility.
Other Businesses. The other subsidiaries of the Company hold
assets consisting of cash and marketable securities, real property
and contract rights.
Prior Operations
Landfill and Waste Handling Operations. In February 1987, the
landfill owned and operated by Kinsley's, the last of the three
solid waste landfills previously operated by subsidiaries of the
Company, reached permitted capacity and was closed. In 1976, the
landfill owned and operated by Kin-Buc, Inc. ("Kin-Buc") was closed
and, in 1977, the landfill operated by Mac Sanitary Land Fill, Inc.
("Mac") was closed. Pursuant to certain federal and state
environmental laws, these subsidiaries continue to be responsible
for maintenance and monitoring activities associated with the
closure procedures of these landfills. The closure procedures
typically include the maintenance of the final cover, stormwater
management, testing and treatment of the landfill gas and fluid
discharges and monitoring associated wells. The Company incurred
significant professional fees and administrative costs regarding
these landfill and waste hauling operations and efforts to obtain
contributions towards the cost of closure procedures from waste
generators and other parties.
The Company's accruals for closure and remediation activities
equal the present value 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. Litigation and administrative costs associated
with a site are expensed as incurred. The Company has accrued
remediation and closure costs for Kinsley's landfill and Mac
landfill, and prior to December 23, 1997, for the Kin-Buc landfill.
Amounts held in certain trusts dedicated to post-closure activities
of Kinsley's are netted against the accrual for presentation in the
Company's balance sheet.
The impact of future events or changes in environmental laws
and regulations, which cannot be predicted at this time, could
result in material changes in remediation and closure costs related
to the Company's past waste handling activities, possibly in excess
of the Company's available financial resources.
At December 31, 2001, the Company has accrued approximately
$11.5 million for the estimated closure and remediation costs of
these landfills. Of such amount, approximately $9.4 million is
held in trusts maintained by trustees for post-closure activities
at Kinsley's landfill.
Kin-Buc. On December 23, 1997, the Company entered into four
agreements which settled lawsuits related to the allocation of
costs of remediation of the landfill owned and operated by Kin-Buc
(the "Kin-Buc Landfill") and substantially relieved the Company
from future obligation with respect to the site (see Part I, Item
3, Legal Proceedings).
The Kin-Buc Landfill, located in Edison, New Jersey, was
operated by Kin-Buc through August 1975. From September 1975 until
the landfill ceased operations in November 1977, the landfill was
managed by Earthline Company ("Earthline"), a partnership formed by
Wastequid, Inc. ("Wastequid"), then a wholly-owned subsidiary of
the Company, and Chemical Waste Management of New Jersey, Inc.
("CWMNJ"), a wholly-owned subsidiary of SCA Services, Inc. ("SCA")
and an affiliate of Waste Management, Inc. (formerly known as WMX
Technologies, Inc.) ("WMI"). The Kin-Buc Landfill and certain
neighboring areas are undergoing remediation under Administrative
Orders (the "Orders") issued by the United States Environmental
Protection Agency ("EPA") in September 1990 and November 1992 to 12
respondents: the Company, Kin-Buc, Earthline, Wastequid, CWMNJ,
SCA, Chemical Waste Management, Inc. (an affiliate of WMI),
Filcrest Realty, Inc. (a wholly-owned subsidiary of the Company)
("Filcrest"), Marvin H. Mahan (a former director, officer and
principal shareholder of the Company), Inmar Associates, Inc. (a
company owned and controlled by Marvin H. Mahan)("Inmar"), Robert
Meagher (a former director and officer of the Company and Inmar)
("Meagher") and Anthony Gaess (a former director and officer of
SCA) ("Gaess").
Contractors have completed the construction phase required by
EPA pursuant to the Orders except for an area known as Mound B as
discussed below. Maintenance of remedial systems installed at the
site and operation of a fluid treatment plant that was constructed
to treat fluids at the site are required for a 30-year period
beginning in 1995. Operation of the treatment plant and
maintenance of the facilities is being conducted by an affiliate of
SCA. The total cost of the construction, operations and
maintenance of remedial systems over this period plus the cost of
past remedial activities was estimated at the time of the December
1997 settlement to be in the range of $80 million to $100 million.
In May 1997, EPA began an investigation of the area in the
vicinity of the Kin-Buc Landfill known as Mound B. In May 1998,
the final plan of this investigation was completed. In February
1999, the Company received a copy of a letter sent from EPA to SCA
informing SCA that EPA has concluded that hazardous materials were
disposed of in Mound B. The letter also instructed SCA to provide
EPA with work plans to address conditions at the mound. A work
plan submitted by SCA, and negotiated throughout much of 2000, was
approved subject to certain contingencies, by EPA during January
2001. The cost of studies and remediation of this area is not
included in the above estimates of the total cost of the
remediation.
In conjunction with the remediation, 26 acres of undeveloped
land neighboring the site and owned by a wholly-owned subsidiary of
the Company were utilized for the construction of the containment
system, treatment plant and related facilities. The property had
been reflected at nominal value on the Company's financial
statements.
Other areas within the vicinity of the site also may become
the subject of future studies due to the historic use of the area
for waste disposal operations. The cost of studies and remediation
of such areas is not included in the present estimates of the total
cost of the remediation of the Kin-Buc Landfill since such work is
outside the scope of the Orders.
The Company spent in excess of $19.5 million on the
remediation of the Kin-Buc Landfill and on correlative actions as
a result of the remediation effort. The construction at Kin-Buc
Landfill since July 1994 has been financed in part with funds
provided by SCA and in part with funds provided from negotiated
settlements with certain parties to a suit that the Company
initiated in June 1990 in the United States District Court for the
District of New Jersey against approximately 450 generators and
transporters of waste disposed of at the site for the purpose of
obtaining contribution toward the cost of remediation (the "1990
Action"). The Company's cause of action against these parties
arises under certain provisions of the Comprehensive Environmental
Response, Compensation and Liability Act, as amended ("CERCLA"),
which imposes joint and several liability for the remediation of
certain sites upon persons responsible for the generation,
transportation and disposal of wastes at such sites.
At December 31, 1996, the Company had accrued approximately
$10.6 million for its share of the costs of such remediation and
closure. The Company has reversed the balance of such accrual as
a result of the settlements described above, and recognized income
of $10.6 million in the year ended December 31, 1997 due to the
elimination of such accrual.
The substantial expense of the Company's prosecution and
defense of claims in the litigation related to the Kin-Buc
Landfill, which the Company had incurred through 1997, will no
longer be borne by the Company. However, since the Company remains
a respondent to the Orders there may be some continuing expenses in
respect of the Kin-Buc Landfill.
Kinsley's. Kinsley's Landfill, Inc. ("Kinsley's"), a wholly-
owned subsidiary of the Company, ceased accepting solid waste at
its landfill in Deptford Township, New Jersey on February 6, 1987
and commenced closure of that facility at that time. At December
31, 2000, Kinsley's has accrued $11.4 million for remaining costs
of closure and post-closure care of this facility, of which $9.4
million is being held in interest-bearing trust accounts.
Mac. Mac Sanitary Land Fill, Inc. ("Mac"), a wholly-owned
subsidiary of the Company, operated a landfill in Deptford
Township, New Jersey that ceased operations in 1977. The costs of
maintaining and monitoring at the facility are being funded by the
Company and were approximately $11,000 and $15,000 for the years
ended December 31, 2001 and 2000, respectively. At December 31,
2000, Mac has accrued closing costs amounting to $61,000 for the
costs of continuing post-closure care and monitoring at the
facility. The Company increased its accrual for closure costs by
$11,000 during 1996 and $131,000 during 1995 due to unanticipated
engineering and testing costs incurred to respond to inquiries from
environmental agencies. The accrual as of December 31, 2001 is
based upon the present value of the estimated maintenance costs of
the site's containment systems through the year 2007.
Carlstadt. In September 1995, the Court approved a settlement
of litigation regarding the allocation of the cost of remediation
of a site in Carlstadt, New Jersey, on which the Company had
operated a solvents recovery facility. The facility was last
operated by the Company in 1970. The settlement agreement relieves
the Company from future obligations to the group of responsible
parties which has been financing the remediation of the site in
exchange for a cash payment, proceeds of the settlement of certain
insurance claims and an assignment of Carlstadt-related claims that
had been filed against the Company's excess insurance carriers (see
Part I, Item 3. Legal Proceedings). Notwithstanding such
settlement, the Company may have liability in connection with the
site to the EPA for its costs of overseeing the remediation of the
site, and to parties who had not contributed to the cost of the
remediation at the time the settlement was approved but who later
do so. The Company has received no indication that the EPA intends
to assert a claim for oversight costs and the Company believes that
the EPA may not have the legal right to do so. Based on the
comprehensive discovery performed during the litigation, the
Company believes that substantially all responsible parties have
been identified, and that the share of remediation costs that is
attributable to parties who had not been contributing to those
costs is de minimis. Therefore, the Company's liability to those
parties, which would arise only if and when those parties actually
paid their share, would not be significant.
In a related matter, in October 1989, the Company, together
with owners and operators of industrial sites in the Hackensack,
New Jersey meadowlands, including a site in Wood-Ridge, were sued
in the United States District Court for the District of New Jersey
for contribution towards the cost of remediation of those sites,
adjacent lands and adjacent water courses, including Berry's Creek.
The plaintiffs in this suit, Morton International, Inc., Velsicol
Chemical Corp. and other parties who have been ordered to remediate
such industrial sites, adjacent lands and adjacent water courses,
seek contribution from the Company towards the cost of remediating
Berry's Creek, which, they allege, was contaminated, in part, by
the Company's operations at a nearby solvents recovery facility at
Carlstadt, New Jersey. Since the plaintiffs' negotiations
concerning the scope of the remediation of Berry's Creek are still
ongoing, and no discovery has taken place concerning allegations
against the Company, it is not possible to estimate the Company's
ultimate liability in this matter.
Discontinued Operations
Valve Manufacturing Segment. On August 17, 1995, the Company
executed a letter of intent pursuant to which the Company's wholly-
owned subsidiary, THV Acquisition Corp. ("THV"), agreed to sell all
of the issued and outstanding stock of HVHC, Inc., a Delaware
corporation ("HVHC"), the then parent of Hunt Valve Company, Inc.,
an Ohio corporation ("Hunt") to ValveCo Inc. On October 24, 1995,
the Company executed the definitive stock purchase agreement. The
sale was subject to approval by the Company's shareholders. Such
approval was granted at a special meeting of the shareholders on
February 29, 1996 and the sale was consummated on March 1, 1996.
A portion of the net cash proceeds ($750,000) was placed in an
interest bearing escrow account to secure the Company's
indemnification obligations to the purchaser under the purchase
agreement, including indemnification for any payments made by Hunt
after the closing in respect of income taxes owed by the Company
for the period that Hunt was a member of the Company's consolidated
tax group. 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 in 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 for taxes of the consolidated tax group for such
years. No indemnification claims have been asserted. The escrowed
funds, which together with $150,000 of accrued interest income,
equaled $950,000 as of December 31, 1999. During December 2000,
$841,000 was released to the Company from the escrowed funds at the
request of the Company when it became evident that the income tax
liability for the years covered by the escrow was less than
$100,000. The escrowed funds with accrued interest income equal
$121,000 as of December 31, 2001.
As previously disclosed by the Company, ValveCo Inc.
("ValveCo"), a Delaware corporation organized by Three Cities
Research, Inc. ("TCR"), a Delaware corporation unaffiliated with
the Company or any of its directors and officers, purchased 100% of
the Hunt common stock owned by THV, representing 79.05% of the
issued and outstanding Hunt common stock. Fifteen percent of the
common stock issued by ValveCo was purchased by certain directors
and executive officers who are members of management of the Company
and/or Hunt. All of ValveCo's shareholders sold all of their stock
of ValveCo during August 1998.
Alkali Products. Harrison Returns, Inc. (f/k/a Cal-Lime,
Inc.) ("Cal-Lime") engaged in the marketing of high alkali
products, primarily lime slurry, to customers needing acid
neutralization agents, such as municipal and industrial wastewater
treatment plants. Sales from this business constituted 7% of the
Company's consolidated operating revenues in 1993, and 5% in 1994.
On August 31, 1995, the Company sold certain machinery,
equipment, contract rights and rights to the Cal-Lime name, and
gave a non-compete covenant, thereby effectively selling the on-
going operations of Cal-Lime which markets alkali products to a
competitor. The Company received a cash payment of $600,000 in
consideration for the assets sold, and additional payments of
$4,785 which were contingent upon the availability of lime slurry
from a specified source to the purchaser. In March 1998, the
Company sold the 2 acres of property and buildings not part of this
transaction for $268,000.
Part I, Item 2. Description of Properties.
1. A subsidiary of the Company, Filcrest Realty, Inc., owns
parcels of land totalling approximately 125 acres in Edison
Township, Middlesex County, New Jersey, which are currently not
being used. This property is located in the vicinity of the Kin-
Buc, Inc. property (see Paragraph 5 below and Part I, Item 1 Prior
Operations). Approximately 26 acres of Filcrest's property has
been dedicated to the remediation of areas neighboring the Kin-Buc,
Inc. property. Approximately 37.5 acres of Filcrest's property are
leased to an unrelated party pursuant to a 99 year lease executed
in 1981. Such lessee operated a landfill on this property through
1987.
2. One of the Company's subsidiaries, Kinsley's Landfill,
Inc., owns approximately 320 acres in Deptford Township, Gloucester
County, New Jersey which are currently being held for sale. The
subsidiary operated a landfill on approximately 100 acres of this
site through February 1987. This landfill is now undergoing post-
closure procedures.
3. Another subsidiary and Transtech own approximately 108
acres in Deptford Township, Gloucester County, New Jersey, which
are currently being held for sale.
4. Another subsidiary of the Company, Mac Sanitary Land Fill,
Inc., leased approximately 88 acres in Deptford Township,
Gloucester County, New Jersey for use as a landfill site until
February 1977. At that time, the lease was terminated in
accordance with provisions of the lease which permitted termination
when and as the landfill reached the maximum height allowed under
New Jersey law. Mac currently conducts post-closure activities at
the site.
5. Another subsidiary of the Company, Kin-Buc, Inc., owns a
27 acre site in Edison Township, Middlesex County, New Jersey, upon
which it operated a landfill. At present, only remediation
activities are conducted on the site (see Part I, Item 1 Prior
Operations).
6. The Company leases its principal executive offices in
Piscataway, New Jersey pursuant to a lease initiated in February
1992. The amended lease effective November 1999 reduced the area
subject to lease from 5,132 square feet to 2,499 square feet and a
monthly rent and utility reimbursement totaling $2,811 for March,
2000 through February 2001, $3,228 for March 2001 to February 2002,
$3,332 for March 2002 to February 2003, $3,436 for March 2003 to
February 2004 and $3,540 for March 2004 to the lease expiration in
February 2005.
Part I, Item 3. Legal Proceedings.
As to Federal Tax Liabilities
In 1991, the Internal Revenue Service (the "Service") asserted
numerous adjustments to the tax liability of the Company and its
subsidiaries for tax years 1980 through 1988, along with interest
and penalties thereon. In 1993, after the conclusion of
administrative proceedings, the Service issued a deficiency notice
to the Company asserting adjustments to income of $33.3 million and
a corresponding deficiency in federal income taxes of approximately
$13.5 million, as well as penalties of $2.5 million and interest on
the asserted deficiency and penalties. In addition, the Service
challenged the carryback of losses incurred by the Company in
taxable years 1989 through 1991, thereby bringing those years,
which had been the subject of an ongoing audit, into the deficiency
notice. On February 9, 1994, the Company filed a petition with the
Tax Court contesting many of the proposed adjustments asserted in
the deficiency notice entitled Transtech Industries, Inc. v.
Commissioner of Internal Revenue Service. On June 5, 1995,
August 14, 1995, March 7, 1996, July 31, 1996, January 22, 1998 and
December 21, 1998, respectively, the Company and the Service
executed a stipulation of partial settlement, first, second and
third revised stipulations of partial settlement and a supplement
and second supplement to the third revised stipulation of partial
settlement. These settlements resolved all of the adjustments
asserted in the deficiency notice. The settlements were approved by
the Congressional Joint Committee on Taxation during April 2000.
The Litigation was concluded during October 2000 and assessments
issued during the first quarter of 2001.
In 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. The
Offer filed in March 2001 has been rejected by the Service, and in
March 2002 the Company filed an appeal of such rejection. Payment
of the state tax liability and interest are due. Amended state tax
returns are being prepared to reflect adjustments to previously
reported income resulting from these settlements.
Insurance Claims
The Company entered into a Settlement Agreement and
Release (the "Settlement Agreement"), dated October 8, 2001 and was
consummated in February 2002, which settled the Company's claims
against certain of its excess insurance carriers.
In 1995, Transtech, and its wholly-owned subsidiaries Kin-Buc,
Inc. and Filcrest Realty, Inc. commenced suit in the Superior Court
of New Jersey, Middlesex County, entitled Transtech Industries,
Inc. et. al v. Certain Underwriters at Lloyds et al., Docket No.
MSX-L-10827-95, (the "Lloyds Suit") to obtain indemnification from
its excess insurers who provided coverage during the period 1965
through 1986 against costs incurred in connection with the
remediation of various sites in New Jersey. The defendant insurers
included various London and London Market insurance companies,
First State Insurance Company and International Insurance Company.
During June 1999, the Company and First State Insurance
Company entered into an agreement pursuant to which the Company
agreed to accept $250,000 in satisfaction of its current and
potential future claims with respect to environmental contamination
as defined in such agreement. During July 2000, the Company and
International Insurance Company entered into an agreement pursuant
to which the Company agreed to accept $17,500 in satisfaction of
its current and future environmental contamination claims.
Some of the London and London Market insurance companies that
participated in the policies held by the Company are insolvent.
The estates of some of these insolvent insurers have sufficient
assets to make a partial contribution toward claims filed by the
Company. During August 1999 the Company received approximately
$35,000 in satisfaction of its claims against the estate of an
insolvent excess insurer.
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.
They also cover certain companies presently or formerly owned,
controlled by or affiliated with Marvin H. Mahan, a former officer
and director, and former majority shareholder of the Company.
In October 1998, the Company entered into an agreement with
Marvin H. Mahan and certain entities affiliated with him,
(collectively, the "Mahan Interests") which resolved certain
disputes and assigned to the Company all rights of the Mahan
Interests, and certain other insured entities affiliated with the
Mahan Interests, as insureds and claimants under excess insurance
policies, including those policies which are the subject of this
litigation (see Part III, Item 12 - Certain Relationships and
Related Transactions).
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 related to such site
(see "As to the Carlstadt Site" below). Subsequent to executing the
September 1995 settlement, certain members of the AT&T Group
conveyed their rights under such settlement to other members of the
AT&T Group (the "Cooperating PRP Group"). During 1998, the Company
and the Cooperating PRP Group agreed to cooperate in the pursuit of
their respective excess insurance claims, and therefore, members of
the Cooperating PRP Group are parties to this Settlement Agreement.
The Company and the Cooperating PRP Group agreed upon an
allocation of the proceeds from the LLoyds Suite that, assuming the
Settlement Agreement was consummated, shall provide the Company 52%
of the proceeds, plus all of the interest earned on both the
Company's and Cooperating PRP Group's portion of the settlement
proceeds while such proceeds are collected and held in escrow
pending consummation of the settlement. In addition, the Company
agreed to pursue non-settling excess insurers. 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.
The Settlement Agreement is among the Company, the Cooperating
PRP Group and certain Underwriters at Lloyd's, London, and certain
London Market Insurance Companies (the "London Market
Insurers")(the aforementioned parties being referred to hereinafter
collectively as the "Parties"). 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.
Each of the London Market Insurers paid into an escrow account
its respective, allocated share of the total negotiated value
assigned to the claims against the subject insurance policies (the
"Settlement Amount"). 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
Settlement Amount 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 and was
received by the Company in 2002, therefore the Lloyd's Suit
settlement will be reflected in the Company's financial results
reported for the quarter ended March 31, 2002.
The obligations of the London Market Insurers under this
Agreement are several, and not joint, and the Company and the
Cooperating PRP Group agreed that no London Market Insurer shall be
liable for any Settlement Amount allocable to any other London
Market Insurer unless it has a contractual obligation to do so
separate and apart from this Settlement Agreement.
Upon the Company's and the Cooperating PRP Group's receipt of
each London Market Insurer's allocated several share of the
Settlement Amount, (a) any and all rights, duties, responsibilities
and obligations of such settling London Market Insurer created by
or in connection with the subject insurance policies will be
terminated, and (b) the Company and the Cooperating PRP Group,
severally, shall remise, release, covenant not to sue and forever
discharge the following: (i) the Settling London Market Insurer ;
and (ii) each of that Settling London Market Insurers' present and
former officers, directors, employees, partners, limited partners,
shareholders, members, subsidiaries, affiliates, representatives,
attorneys and agents in such capacity.
The Settling London Market Insurers agreed to remise, release,
covenant not to sue and forever discharge the Company and the
Cooperating PRP Group, severally, with respect to any and all past,
present or future claims, of any type whatsoever, against the
Company and/or the Cooperating PRP Group relating in any way to or
arising in any way from (i) any of the subject insurance policies,
and (ii) any act, omission, representation, or conduct of any sort,
if any, constituting bad faith, fraud, breach of fiduciary duty,
breach of common law or statutory duty, or impairment of
subrogation, contribution or other insurance rights or benefits.
This release, however, shall not apply to any obligations of the
Company or the Cooperating PRP Group under the Settlement
Agreement.
The Settling London Market Insurers also agreed to waive,
release and discharge any and all claims, they may have for
contribution, subrogation, indemnity, equitable allocation,
apportionment or other insurance against any other insurers of the
Company or the Cooperating PRP Group who have waived, released and
discharged the same claims against the Settling London Market
Insurers.
The Company agreed to indemnify and hold harmless each
Settling London Market Insurer, for defense costs, settlements, and
judgments arising under or in any way related to the subject
insurance policies. The Company's obligations shall include all
claims, whether by way of direct action or otherwise, made by: (a)
other insurers of the Company, (b) any Person claiming to be an
insured or otherwise entitled to rights under the subject insurance
policies; (c) any Person that has acquired claims from or been
assigned the right to make a claim under the subject insurance
policies (except for the Cooperating PRP Group); (d) any federal,
state, or local government or any political subdivision, agency,
department, board or instrumentality thereof.
In the event any Cooperating PRP Group member fails to honor
its indemnification obligations contained in the Settlement
Agreement, the Company shall indemnify and hold harmless Settling
London Market Insurers to the extent of such Cooperating PRP Group
member's unfulfilled obligations. As a condition precedent to the
Company's indemnification obligations, the Settling London Market
Insurers shall act with reasonable diligence and good faith in
taking action to enforce their indemnification rights against such
Cooperating PRP Group member. Providing the Settling London Market
Insurers have complied with the requirements of the foregoing
sentence, the Company shall indemnify Settling London Market
Insurers for their legal fees and costs incurred in pursuing
indemnification from such Cooperating PRP Group member. Settling
London Market Insurers shall assign to the Company all their rights
to any uncollected amounts from such Cooperating PRP Group member.
The Company also committed a portion of its proceeds from the
Lloyd's Suit, net of certain adjustments,be paid to SCA Services,
Inc. ("SCA") in conjunction with the 1997 settlement of the
litigation related to the Kin-Buc Landfill as discussed below,and
to legal counsel representing the Company in the Lloyd's Suit. In
accordance with the terms of the 1997 settlement, $3.5 million of
the Company's share of the Lloyd's Suit settlement is to be held in
escrow until the amount of such obligation, if any, is determined.
The Company and counsel representing the Company in the LLoyd's
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. The Company estimates that the amount of fees ultimately
due, in total will approximate 10% of the Company's anticipated
proceeds payable pursuant to the Settlement Agreement.
As to the Kin-Buc Landfill
The Kin-Buc Landfill, located in Edison, New Jersey, is owned
and was operated by the Company's subsidiary, Kin-Buc. The Kin-Buc
Landfill and certain neighboring areas are undergoing remediation
under an Amended Unilateral Administrative Order issued by EPA in
September 1990 and November 1992 to the Company and other
responsible parties including SCA, which is an affiliate of WMI.
In February 1979, EPA brought suit in the United States
District Court for the District of New Jersey against Transtech,
its subsidiaries Kin-Buc and Filcrest Realty, Inc. ("Filcrest"),
certain former officers, directors and shareholders of Transtech,
and Inmar Realty, Inc. (a company owned and controlled by Marvin H.
Mahan)("Inmar"), in connection with the ownership and operation of
the Kin-Buc Landfill. This suit was placed on administrative hold
by the Court because the Company and SCA agreed to undertake the
remediation of the Landfill. In September 1990, EPA issued an
Administrative Order to the Company, SCA and other respondents for
the remediation of the Kin-Buc Landfill and in November 1992, for
the remediation of certain areas neighboring the Kin-Buc Landfill.
Each respondent to these orders is jointly and severally liable
thereunder. In 1990, Transtech, Kin-Buc and Filcrest commenced a
suit in the United States District Court for the District of New
Jersey entitled Transtech Industries, Inc. et al. v. A&Z Septic
Clean et al. against non-municipal generators and transporters of
hazardous waste disposed of at the Kin-Buc Landfill (the "PRPs")
for contribution towards the cost of remediating the Kin-Buc
Landfill. On December 23, 1997, the Company entered into four
agreements which settled this suit, earlier suits and derivative
lawsuits all 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 all future liability 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 February 1999, EPA informed SCA that EPA has concluded
that hazardous materials were disposed of in Mound B (see Note 9).
Beginning in February 2000, the Company and EPA entered into a
series of tolling agreements pursuant to which EPA agreed to defer
the filing of claims or commencement of litigation with respect to
Mound B against the respondents of the Administrative Orders, and
the Company agreed to extend the statute of limitations which may
otherwise have prevented the filing of such claims or commencement
of litigation. The most recent of such extensions expires April
30, 2002.
As to the Carlstadt Site
Transtech is one of 43 respondents to a September 1990
Administrative Order of EPA concerning the implementation of
interim environmental remediation measures at a site in Carlstadt,
New Jersey owned by Inmar and operated by Transtech as a solvents
recovery plant for approximately five years ending in 1970.
In 1988, Transtech, Inmar and Marvin H. Mahan were sued in a
civil action in the United States District Court for the District
of New Jersey entitled AT&T Technologies, Inc. et al. v. Transtech
Industries, Inc. et al. v. Allstate Insurance Company et al. (the
"AT&T Suit") by a group of generators of waste (the "AT&T Group")
alleging, among other things, that the primary responsibility for
the clean-up and remediation of the Carlstadt site rests with
Transtech, Inmar and Marvin H. Mahan.
In September 1995, the Court approved a settlement of the AT&T
Suit among Transtech, Inmar, Marvin H. Mahan, the AT&T Group and
other generators and transporters of waste handled at the Carlstadt
site who had contributed to the costs of the remediation of the
site. Pursuant to such settlement, Transtech, Inmar and Marvin H.
Mahan agreed to (i) pay $4.1 million of proceeds from settlements
with primary insurers of a coverage action brought by the Company
and Inmar against their primary and excess insurers, (ii) pay an
additional $145,000 ($72,500 from Transtech and $72,500 from Inmar
and Marvin H. Mahan), and (iii) assign their Carlstadt site-related
insurance claims against excess insurers (see "Insurance Claims"
above) in exchange for a complete release from these parties of all
liability arising from or on account of environmental contamination
at the Carlstadt site and the parties' remediation of the same.
Notwithstanding such settlement, the Company may have liability in
connection with the site to EPA for its costs of overseeing the
remediation of the site, and to parties who had not contributed to
the remediation at the time the settlement was approved but who may
later do so. The Company has received no indication that EPA
intends to assert a claim for oversight costs.
In December 1989, Inmar and Transtech agreed to share equally
certain costs in connection with the AT&T Suit. As of December 31,
1992, Transtech paid $514,000 towards such costs. Inmar disputed
which expenses are to be shared. Further, in April 1991, Marvin H.
Mahan made a demand upon Transtech for reimbursement of
approximately $300,000 in costs which he incurred in connection
with the AT&T Suit. The dispute concerning the shared expenses and
Marvin H. Mahan's demand for reimbursement are subjects of the
October 1998 settlement agreement with Inmar (See Part III, Item 12
Certain Relationships and Related Transactions).
As to the Tang Site
Tang Realty, Inc. ("Tang"), a company owned and controlled by
Marvin H. Mahan, (a former director and officer, and former
principal shareholder of the Company) and the Company entered into
a settlement agreement (the "Tang Agreement") in 1988 regarding the
costs of remediation of certain property in Piscataway, New Jersey
owned by Tang (the "Tang Site") pursuant to which the Company
assumed all future remediation costs in connection with the Tang
Site. In October 1990, the Company rescinded the Tang Agreement
based on a reassessment of its involvement at the site. As of the
date of the rescission, the Company had paid approximately
$4,300,000 to Tang in reimbursement for damages and actual
remediation costs incurred. Tang disputed the Company's right to
rescind the Tang Agreement. This dispute was a subject of the
October 1998 settlement discussed in Part III, Item 12. During
July 1999, counsel to the Company was contacted by the United
States Environmental Protection Agency (the "EPA") regarding the
Tang Site. EPA is performing remediation at the site and had
requested information from approximately 100 potentially
responsible parties concerning their involvement with the Tang
Site. Transtech had no direct involvement with EPA since October
1990 and had not been the recipient of an EPA request for
information. The July 1999 inquiry set forth EPA's concern that
the statute of limitations on any claim EPA may have against the
Company with respect to the site would expire during August 1999.
Subsequent to August 1999, in consideration for EPA's agreement to
defer the filing of a claim against the Company prior to the
expiration of such statute of limitations, the Company agreed to
enter into a series of agreements to extend the statute of
limitations. During this period, EPA and the Company discussed the
potential claims EPA was contemplating against the Company with
respect to the site, and the amount of contribution EPA believes
such claims may warrant toward EPA's estimated $2.9 million of
unallocated remediation costs associated with the site. The most
recent of such extensions has expired. On November 20, 2001 EPA
filed suit against the Company in the United States District Court
for the District of New Jersey entitled United States of America v.
Transtech Industries, Inc., alleging that the Company is the
corporate successor to the former operator at the site, Chemsol,
Inc. and had continued its operations at the site. Chemsol, Inc.
was controlled by Marvin H. Mahan. The Company intends to contest
the allegations regarding successorship and the extent of
operations it may have conducted at the site.
In connection with its determination not to continue to
contribute to the remediation of the Tang Site, in March 1991
Transtech made a demand upon Tang for reimbursement of the amounts
it had expended in connection with such remediation. In April
1991, Tang rejected the demand for reimbursement and demanded
Transtech resume the remediation (see Part III, Item 12).
General
In the ordinary course of conducting its business, the Company
becomes involved in certain lawsuits and administrative proceedings
(other than those described herein), some of which may result in
fines, penalties or judgments being assessed against the Company.
The management of the Company is of the opinion that these
proceedings, if determined adversely individually or in the
aggregate, are not material to its business or consolidated
financial position.
The uncertainty of the outcome of the aforementioned
litigation and the impact of future events or changes in
environmental laws or regulations, which cannot be predicted at
this time, could result in reduced liquidity, increased remediation
and closure costs, and increased tax and other potential
liabilities. 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 may
ultimately incur costs and liabilities in excess of its available
financial resources.
Part I, Item 4. Submission of Matters to a Vote of
Security Holders.
None.
PART II
Part II, Item 5. Market for Common Equity and Related
Stockholder Matters.
The information required under this Item is incorporated
herein by reference to the Company's Annual Report to Stockholders
filed herewith as Exhibit 13.
Part II, Item 6. Management's Discussion and Analysis or Plan
of Operation.
The information required under this Item is incorporated
herein by reference to the Company's Annual Report to Stockholders
filed herewith as Exhibit 13.
Part II, Item 7. Financial Statements.
The information required under this Item is incorporated
herein by reference to the Company's Annual Report to Stockholders
filed herewith as Exhibit 13.
Part II, Item 8. Changes In and Disagreements with Accountants
on Accounting and Financial Disclosure.
None.
PART III
Part III, Item 9. Directors, Executive Officers, Promoters
and Control Persons; Compliance with Section
16(a) of the Securities Exchange Act.
Directors and Executive Officers of the Company
Robert V. Silva (57) - President and Chief Executive Officer
and a director of the Company from April 1991 and Chairman of the
Board of Directors from November 1991. Mr. Silva served as a
consultant to the Company from December 1990 until his appointment
in April 1991 as an officer of the Company. Mr. Silva was employed
from September 1987 to December 1990 as Executive Vice President of
Kenmare Capital Corp. ("Kenmare"), an investment firm, and provided
financial and management consulting services to companies acquired
by Kenmare's affiliates. In connection with such financial and
management services, Mr. Silva served as Vice President and a
Director of Old American Holdings, Inc. and its subsidiary from
1988 to 1990, and Vice President and a Director of Compact Video
Group, Inc. and its subsidiaries from 1988 to 1991 and of Manhattan
Transfer/Edit, Inc. from 1989 to 1991. Mr. Silva also served as a
Director of General Textiles from 1989 to 1991. From June 1985 to
September 1987, Mr. Silva served as Vice President of, and provided
management consulting services to, The Thompson Company, a private
investment firm controlled by the Thompson family of Dallas, Texas.
Mr. Silva served as Chairman and Chief Executive Officer of Hunt
Valve Company, Inc., a former subsidiary of the Company, from March
1, 1996 to his resignation effective January 1, 1997, and as a
Director of Hunt from March 1996 to August 1998. Mr. Silva also
served as Vice President and a Director of ValveCo Inc., the entity
which acquired Hunt, from October 10, 1995 to his resignation
effective January 1, 1997, and was a stockholder in ValveCo Inc.
from March 1, 1996 through August 1998. From September 1996 to
February 14, 1997, Mr. Silva served as a Director of Hunt's
subsidiary, Hunt SECO Engineering, Ltd. and its subsidiaries. Mr.
Silva is also the principal of Robert V. Silva and Company, LLC.,
a private investment firm. Mr. Silva served as Chairman and Chief
Executive Officer of Fab-Tech Industries of Brevard, Inc. from
September 1998 through November 1, 2000 and March 31, 2000,
respectively. He continues to serve as a Director of Fab-Tech.
Mr. Silva also serves as a Director of Indesco International, Inc.
since October 2000. Mr. Silva's former wife is the sister-in-law
of Gary Mahan, the son of Marvin H. Mahan and Ingrid T. Mahan.
Arthur C. Holdsworth, III (53) - A director of the Company
since 1988. Since June 1999, Mr. Holdsworth has been General Sales
Manager at the Tilcon NJ Division of Tilcon NY, Inc. From August
1991 through June 1999 Mr. Holdsworth was Vice President of Sales
at Millington Quarry, Inc. Prior to that and from 1977, Mr.
Holdsworth was General Manager of Dallenbach Sand Co., Inc. Members
of the Mahan family own Millington Quarry, Inc. and previously
owned Dallenbach Sand Co, Inc.
Andrew J. Mayer, Jr. (46) - Vice President-Finance and Chief
Financial Officer of the Company from November 1991 and a director
of the Company from December 1991 and, from April 1992, Secretary
of the Company. From 1988 to November 1991, Mr. Mayer served as
Vice President, Secretary and Treasurer of Kenmare. In connection
with management and financial services provided by Kenmare, Mr.
Mayer served in a variety of capacities for the following
companies: Old American Holdings, Inc. and its subsidiary from
1988 to 1991; The Shannon Group, Inc. and its subsidiaries from
1988 to 1990; Detroit Tool Group, Inc. and its subsidiaries from
1989 to 1990; Compact Video Group, Inc. from 1988 to 1991;
Manhattan Transfer/Edit, Inc. from 1989 to 1991; and General
Textiles from 1989 to 1990. Mr. Mayer served as Executive Vice
President of Hunt Valve Company, Inc., a former subsidiary of the
Company from March 1, 1996, the date the Company sold Hunt, to his
resignation effective January 1, 1997. Mr. Mayer served as Vice
President - Chief Financial Officer of ValveCo Inc. from April 3,
1996 through his resignation effective January 1, 1997, and was a
stockholder in ValveCo Inc. from March 1, 1996 through August,
1998. From September 1996 to February 14, 1997, Mr. Mayer served
as a Director of Hunt's subsidiary, Hunt SECO Engineering, Ltd. and
its subsidiaries. Mr. Mayer is an investor, and serves in a
variety of capacities, in certain entities established by Robert V.
Silva & Company, LLC for private investment purposes. Mr Mayer
also served as a Director, Chief Financial Officer and Secretary of
Fab-Tech Industries of Brevard, Inc. from September 1998 through
November 1, 2000. He continues to serve as a Vice President of
Fab-Tech.
Compliance with Section 16(a) of Securities
Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's officers and directors, and persons who own more than
ten percent of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership
with the Securities and Exchange Commission. Officers, directors
and greater than ten-percent shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a)
forms they file. Based solely on a review of the copies of such
forms furnished to the Company, or written representations that no
Forms 5 were required, the Company believes that during the
Company's fiscal year ending December 31, 2001 all Section 16(a)
filing requirements applicable to its officers, directors and
greater than ten-percent beneficial owners were complied with.
Part III, Item 10. Executive Compensation.
Summary Compensation Table
The following table summarizes the compensation paid to or
earned by the President and Chief Executive Officer (the "Chief
Executive Officer") and the Vice President-Finance, Chief Financial
Officer and Secretary (the "Named Executive Officer") in the years
ending December 31, 2001, 2000, 1999 ("Fiscal 2001", "Fiscal 2000"
and "Fiscal 1999", respectively) for services rendered by them to
the Company in all capacities during such years. Both the Chief
Executive Officer and the Named Executive Officer were the only
executive officers of the Company whose total annual salary and
bonus exceeds $100,000 and were serving as executive officers of
the Company at December 31, 2001.
Annual Compensation
Other
Name and Annual
Principal Fiscal Compen-
Position Year Salary Bonus sation (a)
Robert V. Silva 2001 $205,000 $0 $2,032
President and Chief 2000 $154,744 $0 $1,547
Executive Officer 1999 $157,332 $0 $1,573
Andrew J. Mayer, Jr 2001 $167,000 $0 $1,658
Vice President- 2000 $136,000 $0 $1,360
Finance, Chief 1999 $136,000 $0 $1,360
Financial Officer
and Secretary
Long Term Compensation
Awards Payouts
Options/ Long-Term All
Name and Restricted Stock App- Incentive Other
Principal Fiscal Stock reciation Plan Compens-
Position Year Awards Rights Payouts ation(b)
Robert V. Silva 2001 0 0 0 0
President and Chief 2000 0 0 0 0
Executive Officer 1999 0 0 0 0
Andrew J. Mayer, Jr 2001 0 0 0 0
Vice President- 2000 0 0 0 0
Finance, Chief 1999 0 0 0 0
Financial Officer
and Secretary
(a) In each case, the amount shown as other annual
compensation is the Company's matching contributions to its 401(k)
Plan on behalf of the Chief Executive Officer and the Named
Executive Officer during each of Fiscal 2001, Fiscal 2000 and
Fiscal 1999. In each of Fiscal 2001, Fiscal 2000 and Fiscal 1999,
the Company's 401(k) Plan provided for a match equal to 50% of a
participant's contribution to the plan in that year, subject to a
maximum of (i) 2% of compensation in that year or (ii) applicable
Internal Revenue Service limits.
(b) The aggregate value of all other perquisites granted the
Chief Executive Officer and the Named Execution Officer is less
than 10% of their respective salaries.
During Fiscal 2001, the Chief Executive Officer and the Named
Executive Officer were granted 50,000 and 40,000 shares,
respectively, of the Company's Common Stock issued pursuant to the
Company's 2001 Employee Stock Plan. The granted shares were
registered on March 23, 2001 and issued on March 27, 2001.
Stock Option Plans
The following table sets forth, with respect to grants of
stock options and stock appreciation rights ("SARs") to the Chief
Executive Officer and the Named Executive Officer during Fiscal
2001: (a) the number of options granted; (b) the percent the grant
represents of total options granted to employees during Fiscal
2001; (c) the per-share exercise price of the options granted; and
(d) the expiration date of the options.
OPTION/SAR GRANTS IN FISCAL 2001
% Of Total
Options/SARs*
Options/ Granted to Exercise Expir-
SARs* Employees in or Base ation
Name Granted (#) Fiscal Year Price ($/sh) Date
Robert V. Silva 0 N/A N/A N/A
Andrew J.Mayer, Jr 0 N/A N/A N/A
*No SARs have been issued by the Company.
The following table sets forth: (a) the number of shares
received and the aggregate dollar value realized in connection with
each exercise of outstanding stock options during Fiscal 2001 by
the Chief Executive Officer and the Named Executive Officer; (b)
the total number of all outstanding, unexercised options
(separately identifying exercisable and unexercisable options) held
by such executive officers as of the end of Fiscal 2001; and (c)
the aggregate dollar value of all such unexercised options that are
in-the-money (i.e., options as to which the fair market value of
the underlying common stock of the Company that is subject to the
option exceeds the exercise price of the option), as of the end of
Fiscal 2001.
AGGREGATED OPTION/SAR EXERCISES IN FISCAL 2001
AND FISCAL YEAR-END OPTION/SAR VALUES
Number of
Unexercised
Options/SARs* at
Fiscal Year-End(#)
Shares Acquired Exercisable/
Name on Exercise (#) Value Realized($) Unexercisable
Robert V. Silva 0 N/A 0/0
Andrew J. Mayer, Jr. 0 N/A 5,000/0
Value of Unexercised
In-the-Money
Options/SARs* at
Fiscal Year-End($)
Exercisable/
Unexercisable
Robert V. Silva 0/0
Andrew J. Mayer, Jr. 0/0
* No SARs have been issued by the Company.
Compensation of Directors
Directors of the Company who are not also employees are paid
annual directors' fees of $1,875 per calendar quarter, plus $500
for attending each meeting of the board. In Fiscal 2001, Arthur C.
Holdsworth, III earned fees of $9,000.
Part III, Item 11. Security Ownership of Certain Beneficial Owners
and Management.
As of the close of business on March 22, 2002, the Company has
issued and outstanding 2,979,190 shares of Common Stock, which
figure excludes 1,885,750 shares owned by the Company which are not
outstanding and are not eligible to vote.
Set forth below is a table showing, as of March 22 2002, the
number of shares of Common Stock owned beneficially by:
(1) each person known by the Company to be the
beneficial owner of more than 5% of the outstanding shares of such
Common Stock;
(2) each director of the Company;
(3) the chief executive officer of the Company (the
"Chief Executive Officer");
(4) the most highly compensated executive officers of
the Company (other than the Chief Executive Officer) whose total
annual salary and bonus exceeds $100,000 (the "Named Executive
Officer"); and
(5) all officers and directors of the Company as a
group.
Unless otherwise specified, the persons named in the table
below and footnotes thereto have the sole right to vote and dispose
of their respective shares.
Name and Address of
Beneficial Owner and Number of Shares Percentage
Identity of Group Beneficially Owned of Class
Roger T. Mahan 325,435 (a),(d) 10.9%
47 McGregor Avenue
Mt. Arlington, NJ 07856
Nancy M. Ernst 321,775 (a),(b),(d) 10.8%
2229 Washington Valley Rd.
Martinsville, NJ 08836
Gary A. Mahan 310,601 (a),(c),(d) 10.4%
53 Cross Road
Basking Ridge, NJ 07920
Robert V. Silva 79,968 (e) 2.7%
200 Centennial Avenue
Piscataway, NJ 08854
Andrew J. Mayer, Jr. 45,900 (f) 1.5%
200 Centennial Avenue
Piscataway, NJ 08854
Arthur C. Holdsworth, III 23,200 (g) .8%
200 Centennial Avenue
Piscataway, NJ 08854
All executive officers 149,068 (h) 5.0%
and directors as a group
(3 in group)
(a) Roger T. Mahan, Nancy M. Ernst and Gary A. Mahan are the
children of Marvin H. Mahan, a former officer and director, and
former principal shareholder of the Company, and his wife, Ingrid
T. Mahan. Marvin H. and Ingrid T. Mahan disclaim beneficial
ownership of the shares owned by their children.
(b) Includes 8,600 shares owned by Nancy M. Ernst's husband,
Kenneth A.Ernst, and 18,200 shares owned by their minor children.
Mr. Ernst was a director of the Company from June 1987 through
April 29, 1994.
(c) Includes 8,600 shares owned by Gary A. Mahan's wife,
Elizabeth Mahan, and 8,600 shares owned by their minor child.
(d) Members of the Mahan family, consisting of Roger T. Mahan,
Nancy M. Ernst and Gary A. Mahan, their spouses and children and
their parents, Marvin H. Mahan and Ingrid T. Mahan, own 967,911
shares of Common Stock, which represent approximately 32% of the
shares outstanding. In addition, Ingrid T. Mahan is executrix of
the estate of Arthur Tang, which owns an additional 32,750 shares
of such common stock.
(e) Includes 6,822 shares held in the Company's 401K Plan, and
50,000 shares granted pursuant to the Company's 2001 Employee Stock
Plan.
(f) Includes incentive options to purchase 5,000 shares at
$0.438 per share, all of which are presently exercisable, and
40,000 shares granted pursuant to the Company's 2001 Employee Stock
Plan.
(g) Includes 20,000 shares granted pursuant to the Company's
2001 Employee Stock Plan.
(h) Includes incentive options to purchase 5,000 shares held
by an officer of the Company, all of which are presently
exercisable and 110,000 shares granted to the executive officers
and director pursuant to the Company's 2001 Employee Stock Plan.
Part III, Item 12. Certain Relationships and Related Transactions.
On April 22, 1994, the Company made a loan of $75,000 to the
President and Chairman of the Board of Directors of the Company,
evidenced by a note with interest at a floating prime rate plus 1%.
The amount of the loan together with interest of $47,000 was repaid
during December 2000.
The Company has provided Marvin H. Mahan, a former officer
and director, and former principal shareholder of the Company, and
the father of three of the Company's principal shareholders, the
use of an automobile and contributed to the expenses of maintaining
an office for his use including secretarial services since his
retirement from the Company. Such expenses totalled approximately
$11,000 for each of the years ended December 31, 2001 and 2000.
In October 1998, the Company, Marvin H. Mahan and certain
entities affiliated with him entered into an agreement which
resolved outstanding disputes. The Company had been negotiating
with Inmar, Marvin H. Mahan and Tang (collectively, the "Mahan
Interests") toward a settlement of disputes with the Company,
namely, Inmar's demand for damages for loss of value of property
adjoining the Kin-Buc Landfill, the sharing of legal expenses of
the suit settled in 1995 pertaining to a site in Carlstadt, New
Jersey, and the reimbursement of remediation costs and damages for
loss of value at the Piscataway, New Jersey site owned by Tang.
Negotiations broadened to include the Mahan Interests' joining in
the December 1997 settlement of a derivative suit stemming from
litigation regarding the remediation of the Kin-Buc Landfill, the
satisfaction of Kin-Buc's judgment against Inmar regarding in-
ground clay deposits purchased by Kin-Buc in 1988 and the Mahan
Interests' cooperation in the prosecution of the suit against
Transtech's excess insurers. In October, 1998 the Company entered
into an agreement with the Mahan Interests which resolved such
disputes and assigned to the Company all rights of the Mahan
Interests, and certain other insured entities affiliated with the
Mahan Interests, as insureds and claimants under the excess
insurance policies, including those policies which are now the
subject of litigation initiated by the Company (see Part I, Item 3,
Legal Proceedings). The Company agreed to vacate Kin-Buc's
judgment against Inmar in exchange for $480,000 which was paid to
the Company from funds deposited with the Superior Court of New
Jersey, and to pay $200,000 for the aforementioned assignment of
rights under the insurance policies to be paid in two equal
installments. The first installment was paid when the Company
received the $480,000 from the Superior Court. An amount equal to
the second installment was placed in escrow when the funds were
received from the Superior Court and is included in "Other" assets
in the accompanying December 31, 2001 and 2000 balance sheets. The
second installment was released from escrow in 2002 when the
Company received payment for claims made against the insurance
carriers. The Company also agreed to indemnify Marvin H. Mahan for
claims that may be made on account of past actions he took in his
role as an officer and director of the Company and reimbursed
Marvin H. Mahan $68,000 for a portion of the Mahan Interests' legal
fees related to the Kin-Buc litigation and their efforts to release
the funds held by the Superior Court. The Mahan Interests and the
Company exchanged releases from all other claims each has made
against the other.
PART IV
Part IV, Item 13. Exhibits and Reports on Form 8-K.
Exhibits
The exhibits to this report are listed in the Exhibit Index on
[pages 31 to 34].
Reports on Form 8-K
The Company filed a report on Form 8-K dated October 8, 2001
to announce the agreement among the Company and certain of its
excess insurers which settles the Company's claims for
indemnification against such insurers. Such claims are the subject
of a suit commenced in 1995.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused this
report to be signed on its behalf by the undersigned, hereunto duly
authorized.
TRANSTECH INDUSTRIES, INC.
(Registrant)
By: /s/ Robert V. Silva
Robert V. Silva, President and
Chief Executive Officer
and Director
Dated: March 28, 2002
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Company and in the capacities and on the date
indicated.
/s/ Robert V. Silva March 28, 2002
Robert V. Silva, President and
Chief Executive Officer
and Director
/s/ Andrew J. Mayer, Jr. March 28, 2002
Andrew J. Mayer, Jr.
Vice President-Finance, Chief
Financial Officer, Secretary and
Director
TRANSTECH INDUSTRIES, INC.
EXHIBIT INDEX
Sequential
Exhibit No. Page No.
3 Articles of Incorporation and By-Laws:
3 (a) Articles of incorporation: Incorporated by
reference to Exhibit 3 (a) to the Company's
Annual Report on Form 10-K for fiscal year
ended December 31, 1989.
3 (b) By-laws: Incorporated by reference to Exhibit
3 (b) to the Company's Annual Report on Form
10-K for fiscal year ended December 31, 1989.
3 (c) Amended and restated by-laws: See "G" below.
10 Material contracts:
10 (n) Property Purchase Agreement dated December 31,
1992 by and among Red Robin Realty, Inc. as
Seller and James Messner, Sr. and James
Messner, Jr. as Buyers: See "C" below.
10 (o) Asset Purchase Agreement dated December 31,
1992 by and among Genetic Farms, Inc., as
Seller and James Messner, Sr. and James
Messner, Jr., as Buyers: See "C" below.
10 (p) Settlement Agreement and Mutual Release dated
October 28, 1992 among Transtech Industries,
Inc. and certain of its subsidiaries and
affiliates, Inmar Associates, Inc. and certain
of its affiliates, Marvin H. Mahan, Roger T.
Mahan and The Continental Insurance Company:
See "C" below.
10 (q) Order for Approval of De Minimis Settlement
and for Dismissal of Certain Defendants of the
District Court for the District of New Jersey
dated November 2, 1992 in Transtech
Industries, Inc. et al. v. A&Z Septic Clean,
et al., Civil Action No. 90-2578 (HAA)
approving settlements with certain defendants
identified on Exhibits 1 and 2 to such Order
pursuant to The Kin-Buc Landfill Contribution
Agreement in the form of Exhibit 3 to such
Order: See "C" below.
Sequential
Exhibit No. Page No.
10 (y) Settlement Agreement and Mutual Release dated
May 31, 1994 among Transtech Industries, Inc.
and certain of its subsidiaries and
affiliates, Inmar Associates, Inc. and certain
of its affiliates, Marvin H. Mahan, Roger T.
Mahan and The City Insurance Company: See "D"
below.
10 (z) Settlement Agreement and Release dated April
20, 1994 among Transtech Industries, Inc.
Inmar Associates, Inc., Marvin H. Mahan, Mt.
Vernon Insurance Company and The United States
Liability Insurance Company: See "D" below.
10 (ac) Settlement Agreement and Release dated
September 16, 1994 among Transtech Industries,
Inc., and its subsidiaries and affiliates,
Inmar Associates, Inc., and its subsidiaries
and affiliates, and the National Union Fire
Insurance Company of Pittsburgh, Pa.: See "E"
below.
10 (ad) Settlement Agreement and Mutual Release dated
October 3, 1994 among Transtech Industries,
Inc., and its subsidiaries and affiliates,
Inmar Associates, Inc. and its subsidiaries
and affiliates, Marvin H. Mahan and Allstate
Insurance Company: See "E" below.
10 (au) Settlement Agreement approved in September
1995 among Transtech Industries, Inc., Inmar
Associates, Inc., Marvin H. Mahan and certain
members of the 216 Paterson Plank Road
Cooperating PRP Group: See "F" below.
10 (av) Income Tax Sharing Agreement dated September
27, 1991 among Transtech Industries, Inc., THV
Acquisition Corp., HVHC, Inc. and Hunt Valve
Company, Inc.: See "F" below.
10 (aw) Stock Purchase Agreement dated as of October
24, 1995 between ValveCo Inc. and THV
Acquisition Corp. (without schedules): See
"G" below.
Sequential
Exhibit No. Page No.
10 (ax) Amended and Restated Stock Purchase Agreement
dated as of January 15, 1996 among THV
Acquisition Corp., ValveCo Inc., Transtech
Industries, Inc., Hunt Valve Company, Inc. and
Terold N.V., with exhibits, and letter
agreement dated February 5, 1990 among THV
Acquisition Corp., ValveCo Inc. and Transtech
Industries, Inc.: See "H" below.
10 (ay) Escrow Agreement dated March 1, 1996 by and
among THV Acquisition Corp., ValveCo Inc. and
United States Trust Company of New York, as
escrow agent: See "I" below.
10 (az) Settlement Agreement for Matters Relating to
the Kin-Buc Landfill dated December 23, 1997
among Transtech Industries, Inc. and certain
of its subsidiaries, Waste Management, Inc.
and certain of its affiliates including SCA
Services, Inc., Inmar Associates, Inc., Dock
Watch Quarry, Inc., Marvin H. Mahan, Robert J.
Meagher, and Anthony Gaess: See "J" below.
10 (ba) Stipulation of Settlement and Release dated
December 23, 1997 among Transtech Industries,
Inc. and certain of its shareholders and
former officers, Inmar Associates, Inc., Tang
Realty, Inc., Waste Management, Inc. and
certain of its affiliates including SCA
Services, Inc.: See "J" below.
10 (bb) Settlement Agreement dated October 22, 1998
among Transtech Industries, Inc. and its
subsidiary, Inmar Associates, Inc., Tang
Realty, Inc., Dock Watch Quarry Pit, Inc. and
Marvin H. Mahan: See "K" below.
10 (bc) Transtech Industries, Inc. 2001 Employee Stock
Plan: See "L" below.
10 (bd) Agreement of Purchase and Sale dated May 17,
2001 among Transtech Industries, Inc. (and its
subsidiaries Birchcrest, Inc. and Kinsley's
Landfill, Inc.) and BWF Development, LLC.: See
"M" below.
10 (be) Confidential Settlement Agreement and
Release, dated October 8, 2001, among certain
members of the 216 Paterson Plank Road
Cooperating PRP Group, Transtech Industries,
Inc., certain Underwriters at Lloyd's, London,
and certain London Market Insurance Companies:
See "N" below.
11 Statement regarding computation of net loss 39
per share
13 Annual Report to Stockholders 40 - 94
21 Subsidiaries of the Registrant 95
"A" Incorporated herein by reference to the
Company's Current Report on Form 8-K dated
June 30, 1989.
"B" Incorporated herein by reference to the
Company's Current Report on Form 8-K dated
July 14, 1989.
"C" Incorporated herein by reference to the
Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1992, as
amended on May 18, 1993.
"D" Incorporated herein by reference to the
Company's Quarterly Report on Form 10-QSB for
the quarter ended June 30, 1994.
"E" Incorporated herein by reference to the
Company's Quarterly Report on Form 10-QSB for
the quarter ended September 30, 1994.
"F" Incorporated herein by reference to the
Company's Quarterly Report on Form 10-QSB for
the quarter ended September 30, 1995.
"G" Incorporated herein by reference to the
Company's Current Report on Form 8-K dated
October 24, 1995.
"H" Incorporated herein by reference to the
Company's Current Report on Form 8-K dated
March 1, 1996.
"I" Incorporated herein by reference to the
Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 1995.
"J" Incorporated herein by reference to the
Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1997.
"K" Incorporated herein by reference to the
Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1998.
"L" Incorporated herein by reference to the
Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 2001.
"M" Incorporated herein by reference to the
Company's Current Report on Form 8-K dated May
17, 2001.
"N" Incorporated herein by reference to the
Company's Quarterly Report on Form 10-QSB for
the quarter ended September 30, 2001.