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, 2002
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.
15: (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: $737,000
At March 21, 2003 the aggregate market value of the voting stock of
the registrant held by non-affiliates was approximately $73,058.
At March 21, 2003 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:
Annual report to security holders for the fiscal year ended December
31, 2002 is incorporated by reference into Part II of this Form 10-KSB
Transitional Small Business Disclosure Format (check one):
YES NO X
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
________________
FORM 10-KSB
FOR THE YEAR ENDED DECEMBER 31, 2002
I N D E X
Part I, Item 1. Description of Business 3 - 13
" Item 2. Description of Properties 14
" Item 3. Legal Proceedings 15 - 24
" Item 4. Submission of Matters to a Vote
of Security Holders 25
Part II, Item 5. Market for Common Equity and
Related Stockholder Matters 26
" Item 6. Management's Discussion and
Analysis or Plan of Operation 26
" Item 7. Financial Statements 26
" Item 8. Changes in and Disagreements
with Accountants on Accounting
and Financial Disclosure 26
Part III, Item 9. Directors, Executive Officers,
Promoters and Control Persons;
Compliance with Section 16(a)
of the Exchange Act 27 - 29
" Item 10. Executive Compensation 30 - 32
" Item 11. Security Ownership of Certain
Beneficial Owners and Management 33 - 35
" Item 12. Certain Relationships and Related
Transactions 35 - 36
" Item 13. Exhibits and Reports on Form 8-K 37
" Item 14. Controls and Procedures 37
Signatures and Certifications 38-42
Exhibit Index 42-47
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).
The Company consists of the parent company, Transtech, two
operating subsidiaries and 19 inactive subsidiaries. Transtech is
a public holding company which manages its investments and
subsidiaries. The operations of the subsidiaries include an
electricity generation segment and an environmental services
segment.
At December 31, 2002, the Company employed 17 persons on a
full-time basis.
The Company and certain subsidiaries were previously involved
in the resource recovery and waste management industries. These
activities ended in 1987 and 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). The Company has also incurred significant
litigation and administrative expenses in ongoing litigation
related to its past activities in the resource recovery and waste
management industries, its ongoing litigation against certain
excess insurance carriers for reimbursement of past remediation
expenditures, and past litigation before the U.S. Tax Court.
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 sold a portion
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 2002, the Company consummated an
agreement reached in 2001 that settled its claims against certain
excess insurance carriers.
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 amount of such
tax obligations has been estimated at $4.5 million through December
31, 2002. 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)
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). 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, and
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 continues to pursue its claims against the non-settling
excess insurance carriers, 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 49% of the
environmental services segment's gross revenues for 2002, compared
to 47% for the prior year, were from other members of the
consolidated group, and therefore eliminated in consolidation. The
segment contributed 91% and greater than 99% to net consolidated
revenues in each of the years ended December 31, 2002 and 2001,
respectively, after elimination of intercompany sales.
Substantially all third party sales during 2002 and 2001 were to
one and two customer(s), respectively.
The Company has and continues 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.
The majority of the third party revenue for the years 2002 and
2001 relates to the Company's activities at SOLF. On May 15, 2000
the Company's capping plan for SOLF was approved by the New Jersey
Department of Environmental Protection ("NJDEP") (the "Capping
Plan"). The Capping Plan was limited to the grading and capping of
the 12 acre lined portion of SOLF and grading and capping of a
portion of the adjoining 44 acre unlined landfill area, 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, stormwater management,
gas vent installation and associated activities. The Capping Plan
called for the use of recycled materials where possible in the
implementation of the plan. Tipping fees generated from the
deposit of the recycled materials were paid into an escrow fund
from which the Capping Plan costs are paid. The Company performs
certain of the above construction activities, sub-contracts other
activities and performs all managerial functions required under the
Capping Plan, as well as acts as SOLF's agent to solicit the
recycled materials. The Company had initially agreed to seek
payment for its services and reimbursement for its costs solely
from the escrowed funds generated from the delivery of recycled
materials. One recycled material accounted for 65% of the initial
projected volume of all recycled materials to be deposited at the
site. The availability of this recycled material declined
dramatically since the project was first proposed during 1998, and
the Company had a limited ability to substitute materials under the
Capping Plan. As a result, the project fell behind schedule and
incurred a disproportionate level of operating expenses relative to
tipping fees generated. The Capping Plan was subsequently modified
to (a) eliminate the capping of the adjoining area and access road,
(b) allow additional time in which to complete the project, (c)
allow additional materials to be incorporated into the plan in
order to provide funding of a portion of the additional estimated
project costs, and (d) provide funding of certain aspects of the
closure by the county and state. The Company has completed capping
10 of the 12 acres requiring a cap, and the related installation of
stormwater management and gas vent systems. Deposits of revenue
producing recycled materials at the site ended during September
2002. Installation of the synthetic liner component of the cap is
temperature sensitive, therefore construction activities at the
site were suspended for the harsh winter months beginning in
November 2002. Work on the remaining tasks is anticipated to
restart in April 2003 and is expected to be completed within two to
three months. The Company sought an amendment to the Capping Plan
that would permit the acceptance of recycled materials into an
adjacent area beyond December 30, 2002 in order to provide
additional funds to the project through the tipping fees charged
for the deposit of such materials. The Company was unsuccessful in
obtaining the approval of NJDEP and regional authorities of such an
amendment. Therefore, given the projected escrowed funds
remaining, the inability to generate funds from the acceptance of
additional material and the proximity to the expiration of the
project, the Company recognized a bad debt expense of $700,000
during the year ended December 31, 2002 in recognition of the
write-off amounts billed but greater than that expected to be
collected for work on the SOLF project. The estimated total cost
of the Capping Plan is approximately $4.9 million, of which an
estimated $2.0 - 2.2 million would be billed by the Company for
services provided on the project. The Company recognized revenue
of $667,000 and $728,000 related to this site during the twelve
months ended December 31, 2002 and 2001, respectively, of which
$462,101 and $1,042,000 are included in Accounts receivable - trade
at December 31, 2002 and 2001, respectively.
The Company is continuing its efforts to expand the
customer base of the environmental services segment to additional
entities outside the consolidated group. For example, the Company
submitted a bid to cap and close the adjoining 44 acre unlined
landfill area of SOLF, but was not awarded the contract because of
lower competing bids. The definition of the scope, commencement
and duration of other opportunities are in various stages of
development. There are no assurances such efforts will result in
work for the Company.
The Company's environmental services segment continues to
perform closure activities on sites previously operated by the
Company's subsidiaries. Work performed on a landfill owned by the
Company and located in Deptford, New Jersey is submitted for
reimbursement to a trust account established to finance the closure
activities at the site. The Company billed such escrow account
approximately $621,000 and $630,000 for services performed during
the years ended December 31, 2002 and 2001, respectively. Such
amounts are included in the amount of intercompany sales reported
above, and eliminated in the calculation of net operating revenue.
The Company has submitted a re-capping plan for this site to the
NJDEP. The re-capping plan calls for the use of recycled materials
to fill depressions and re-contour the top of the mound, and the
installation of a synthetic liner on surfaces currently lacking a
synthetic liner. The plan envisions that the work be funded by
tipping fees charged for the deposit of the recycled materials onto
the site. The work would be performed in phases in an attempt to
minimize negative financial impacts, if any, from future changes in
the markets for recycled material.
Electricity Generation. Revenues from operations which
generate electricity utilizing methane gas as fuel represented were
approximately $70,000 and $1,000, or 9% and less than 1% of
consolidated net revenues in each of the years ended December 31,
2002 and 2001, respectively.
The Company elected to begin repairs to the diesel/generating
units previously postponed pending the outcome of negotiations of
offers to purchase the electricity generating operations.
Overhauls of certain equipment began in May 2002 in preparation for
the Company's operation of the facility or its ultimate sale. The
Company temporarily curtailed the facility's operations during June
1999 and had operated one unit sporadically since June 2000. The
electricity generating facility consists of four diesel/generating
units each capable of generating approximately 11,000 kWh/day at
85% capacity. Electricity generated is sold pursuant to a long
term contract with a local utility. The contract has three years
remaining. Revenues are a function of the number of kilowatt hours
sold, the rate received per kilowatt hour and capacity payments.
The Company sold 2.0 million kWh during the year ended December 31,
2002 compared to 14,000 kWh sold in the prior year. The average
combined rate received (per Kilowatt and capacity payment) in the
current period when compared to the comparable period last year
decreased 30%. The contract with the local utility allows for a
continuous interruption in electricity supply for a period of up to
twelve months. Methane gas is a component of the landfill gas
generated by a landfill site owned by the Company and located in
Deptford, New Jersey. Engineering studies indicate sufficient
quantities of gas at the landfill to continue the operation of the
facility for approximately 9 years. Elements of the landfill gas
are more corrosive to the equipment than traditional fuels,
resulting in more hours dedicated to repair and maintenance than
with equipment utilizing traditional fuels.
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.
During 2002, the Company merged two dormant indirect
subsidiaries into their parent company, a direct subsidiary of
Transtech, in an effort to reduce administrative costs.
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. Past Accruals for the Kin-Buc landfill are discussed
below. 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, 2002, the Company has accrued approximately
$11.2 million for the estimated closure and remediation costs of
these landfills. Of such amount, approximately $9.2 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 certain future obligation with respect to the site (see Part
I, Item 3, Legal Proceedings for description of the 1997 Settlement
and recent litigation regarding this site).
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
former 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, the Company remains a
respondent to the Orders and continues to incur legal and
administrative 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, 2002, Kinsley's has accrued $11.2 million for remaining costs
of closure and post-closure care of this facility, of which $9.2
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 $17,000 and $11,000 for the years
ended December 31, 2002 and 2001, respectively. At December 31,
2002, Mac has accrued closing costs amounting to $86,000 for the
costs of continuing post-closure care and monitoring at the
facility. The Company increased its accrual for closure costs by
$42,000 during the year ended December 31, 2002 due to an increase
in engineering, maintenance and testing costs incurred. The
accrual as of December 31, 2002 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 for a discussion of the 1995
settlement and recent litigation regarding the site).
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 cost of the remediation at the time the settlement was approved
but who later choose 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. 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, 2002.
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 maintenance 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. The lease payment is subject to adjustment
increases in specified costs borne by the landlord.
Part I, Item 3. Legal Proceedings.
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 was rejected by the Service, and
in March 2002 the Company appealed the Service's rejection of
its offer. The Company awaits the Service's response to its
appeal. Amended state tax returns reflecting adjustments to
previously reported income resulting from the settlements with
the Service were filed during February 2003.
Insurance Claims for Past Remediation Costs
The Company entered into a Settlement Agreement and
Release (the "Settlement Agreement"), dated October 8, 2001
and 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 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 were 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 "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 to an
allocation of the proceeds from the Lloyds Suit that provided
the Company 52% of the proceeds received from the settling
excess insurers, plus all of the interest earned on both the
Company's and Cooperating PRP Group's portion of the
settlement proceeds while such proceeds were collected and
held in escrow pending consummation of the settlement. The
Company's share of the Settlement Agreement proceeds and
interest earned during the collection of the proceeds was
approximately $13,013,000, of which $9,513,000 is reported in
the other income section of the Company's Consolidated
Statement of Operations for the year ended December 31, 2002,
net of related costs and $3,500,000 is held in escrow pending
the outcome of arbitration with SCA Services, Inc. discussed
below. The Company also agreed to pursue non-settling excess
insurers and that the Cooperating PRP Group shall receive the
first $250,000 collected from the non-settling excess
insurers, less 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 obligations of the London Market Insurers under the
Settlement 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 Settling London Market Insurer; and each of that
Settling London Market Insurers' affiliates as defined in the
Settlement Agreement.
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. 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 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 yet to be determined portion
of its proceeds from the Lloyds Suit, net of certain
adjustments,be paid to 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 Lloyds Suit. The Company and counsel
representing the Company in the Lloyds Suit and certain other
matters entered into an engagement agreement that contains as
compensation both fixed and contingent fees. The amount of
fees due is dependent in-part upon the outcome of the matters.
The Company estimates that the amount of fees ultimately due,
in total will approximate 8.0% of the Company's proceeds paid
pursuant to the Settlement Agreement.
The Kin-Buc Landfill
The Kin-Buc Landfill, located in Edison, New Jersey, was
operated on parcels of property owned and leased 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
certain 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 continues to 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 10). 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 the Kin-Buc Landfill against the
respondents to 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 expired April 30, 2002.
During May, 2002 EPA filed a suit entitled United States
of America vs. Chemical Waste Management, Inc, et al, in the
US District Court for the District of New Jersey (Case No. 02-
2077 (DMC)), and other respondents to the Orders as
defendants. Specifically, Transtech, together with its
subsidiaries Kin-Buc, Inc. and Filcrest Realty, Inc., Inmar
Associates, Inc. and affiliates of Waste Management, Inc.
("WMI") specifically Chemical Waste Management, Inc.,
Earthline Company, Anthony Gaess, SCA Services,Inc., SCA
Services of Passaic, Inc., Waste Management, Inc., Waste
Management Holdings, Inc. and Wastequid, Inc. EPA is seeking
the reimbursement of unreimbursed response costs it has
incurred with respect to the Kin-Buc Landfill of $3 million as
of July 1999. WMI had agreed to indemnify the Company against
EPA claims for unreimbursed response costs pursuant to the
terms of a 1997 Settlement Agreement. In addition, EPA is
seeking penalties for delays experienced in completing the
remediation pursuant to such Orders. However, the terms of
the 1997 Settlement Agreement do not provide the Company with
complete indemnification against the penalties sought by EPA.
The Superfund Law ("CERCLA") allows penalties in an amount up
to $25,000 for violations for each day prior to January 30,
1997, and an amount up to $27,500 for violations for each day
occurring on or after January 30, 1997 for failure to comply
with a requirement of the Orders. The amount EPA is seeking
for penalties was not specified in the complaint. EPA
contends that completion of 12 project milestones were delayed
between 167 to 484 days. Subsequent correspondence with EPA
provided revised claim amounts; the claim for unreimbursed
response costs is approximately $4.2 million, and the claim
for penalties totals $18.1 million. The suit has been stayed
pending the outcome of negotiations.
During September 2002, the New Jersey Department of
Environmental Protection and New Jersey Spill Compensation
Fund filed a similar suit against the same respondents,
entitled New Jersey Department of Environmental Protection,
and Acting Administrator, New Jersey Spill Compensation v.
Chemical Waste Management, Inc. et. al. in the United States
District Court, District of New Jersey (Case No. 02CV 4610
(DMC)), seeking reimbursement of unspecified past costs it has
incurred with respect to the site and for unspecified alleged
natural resource damages. The suit has been stayed pending
the outcome of negotiations.
In conjunction with the 1997 settlement of the litigation
related to the Kin-Buc Landfill discussed above, the Company
committed a yet to be determined portion of the proceeds, net
of certain adjustments, arising from its litigation against
its excess insurance carriers, discussed above, be paid to
SCA. The maximum amount payable to SCA was capped at $3.5
million. In accordance with the terms of the 1997 Settlement,
$3.5 million of the Company's share of the Lloyds Suit
settlement is to be held in escrow until the amount of such
obligation, if any is determined. The amount due SCA was to
be calculated within five days of receiving proceeds from such
litigation, in accordance with the methodology contained
within the 1997 Agreement, and submitted to SCA for review and
acceptance. A calculation of the amount due pursuant to the
1997 Agreement was presented to SCA during March 2002. SCA
subsequently notified the Company of its objection to values
utilized in such calculation, contending it was owed $3.5
million. Unable to resolve the disputed issues, the Company
and SCA submitted the dispute regarding the amount due to
binding arbitration for resolution during August 2002 in
accordance with the terms of the 1997 Agreement. On October
10, 2002 the arbitrator issued his interpretation of the
issues presented, finding in favor of the Company's
interpretations on some of the disputed issues, and in favor
of SCA on others. The Company's subsequent request of the
arbitrator for a statement of reasons concerning the finding
was declined. The arbitrator instructed revised calculation
of the amount due to SCA be submitted to SCA for review and
approval no later than November 11, 2002. On November 11,
2002, counsel representing the Company notified SCA that,
given the arbitrator's findings, certain components of the
calculation, including the amount of interest ultimately to be
paid on the Company's obligations to the Service, cannot be
quantified at the present time. However, the Company had a
revised calculation prepared using the then current value for
certain components. Such calculations indicate no payment due
SCA, and have been challenged by SCA. The arbitration is
ongoing. The Company will recognize income equal to the
amount of the escrow remaining after payment of amounts due
SCA, if any, in the period such funds are released from
escrow.
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 for Past Remediation Costs" 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 the September 1995 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.
During September 2002, EPA issued a notice of potential
liability and of consent decree violations to potentially
responsible parties regarding the Carlstadt site. The site
has been undergoing remediation and EPA now seeks contribution
toward the remediation of an area designated Operable Unit 2.
EPA seeks contribution toward estimated remediation costs of
this phase of $7.5 million and $2.0 million of past oversight
and administrative costs. This matter is currently under
review by the Company and its advisors.
The Tang Site
During July 1999, counsel to the Company was contacted by
EPA regarding a Piscataway, New Jersey site owned by Tang
Realty, Inc. ("Tang"). Tang is a corporation controlled by
Marvin H. Mahan, a former director and officer, and former
principal shareholder of the Company. EPA is performing
remediation at the site and had requested information from
approximately 100 potentially responsible parties concerning
their involvement with the Tang site. The Company had no
direct involvement with EPA since October 1990 and, prior to
July 1999, had not been a 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. 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 an agreement to extend the statute of
limitations. Subsequent to August 1999, EPA and the Company
entered into a series of agreements to extend the statute of
limitations to November 21, 2001. During November, 2001 EPA
filed suit against the Company, entitled United States of
America v. Transtech Industries, Inc., in the United States
District Court, District of New Jersey (Case No. 01-5398
(WGB)) alleging that the Company is the corporate successor to
the former operator at the site, and had continued its
operations at the site. EPA is seeking $2.9 million of
unallocated remediation costs associated with the site. The
Company is contesting the allegations regarding successorship,
and the extent of operations it may have conducted at the
site. Chemsol, Inc. was controlled by Marvin H. Mahan. Tang
and Marvin H. Mahan were named as defendants in a suit brought
by EPA in 2000 seeking contribution toward such unallocated
remediation costs. Both suits have been stayed pending the
outcome of settlement discussions.
Tang 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. 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. This dispute was a subject
of the October 1998 settlement discussed in Part III, Item 12.
Certain Relationships and Related Transactions.
General
With respect to the matters described above, the Company
is unable to predict the outcome of these claims or reasonably
estimate a range of possible loss given the current status of
the litigation. However, the Company believes it has valid
defenses to these matters and intends to contest the charges
vigorously.
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.
No matters were submitted to a vote of the Company's security
holders during the quarter ended December 31, 2002.
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 (59) - 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 continued to serve as a Director of Fab-Tech
until his resignation in September 2002. Mr. Silva also served as
a Director of Indesco International, Inc. from October 2000 through
February 2002. Mr. Silva's former wife is the sister-in-law of
Gary Mahan, the son of Marvin H. Mahan and Ingrid T. Mahan. In
2002, Mr. Silva was subjected to a summary proceeding under New
Jersey's Domestic Violence Act. The court concluded that he had
violated the Act. Mr. Silva flatly denies the allegations which
form the basis of the complaint. After the hearing Mr. Silva
underwent and passed a polygraph examination administered by a
certified polygraphist with regard to those same allegations. Mr.
Silva was deemed to "being truthful" in his answers to the
questions presented during three series of tests. Mr. Silva has
taken an appeal of the finding of the domestic court. The decision
of the domestic court spawned three felony indictments, including
assault, all based on the same allegations. Mr. Silva has retained
separate defense counsel for these charges, has pleaded not guilty,
and is aggressively defending them. The Company has reviewed these
allegations and believes that they are unfounded. The allegations
do not affect the Company's assessment of Mr. Silva's capability or
integrity. The Company supports Mr. Silva in his defense and fully
expects him to be exonerated.
Arthur C. Holdsworth, III (54) - 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. (47) - 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 continued to serve as a Vice President of
Fab-Tech until his resignation in September, 2002.
Significant Employee of the Company
Samuel N. Barresi (58) - Mr. Barresi served as President and
Vice President of the Company's wholly owned subsidiaries United
Environmental Services, Inc. and Kinsley's Landfill, Inc.,
respectively, for the period from June 24, 2002 to April 4, 2003.
From 1972 to 2001, Mr. Barresi was the principal of two firms
active within the heavy construction industry. Prior to that, he
served in engineering functions with Getty Oil Company and Raymond
International Incorporated. Mr. Barresi currently has an interest
in a real estate investment firm.
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, 2002 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, 2002, 2001, 2000 ("Fiscal 2002", "Fiscal 2001"
and "Fiscal 2000", respectively) for services rendered by them to
the Company in all capacities during such years. The Chief
Executive Officer and the Named Executive Officer were the only
executive officers and significant employees of the Company whose
total annual salary and bonus exceeds $100,000 and were serving as
executive officers and significant employees of the Company at
December 31, 2002.
Annual Compensation
Other
Name and Annual
Principal Fiscal Compen-
Position Year Salary Bonus (a) sation (b)
Robert V. Silva 2002 $211,150 $83,810 $2,000
President and Chief 2001 $205,000 $0 $2,000
Executive Officer 2000 $154,744 $0 $1,547
Andrew J. Mayer, Jr 2002 $172,000 $60,690 $1,720
Vice President- 2001 $167,000 $0 $1,658
Finance, Chief 2000 $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(c)
Robert V. Silva 2002 0 0 0 0
President and Chief 2001 0 0 0 0
Executive Officer 2000 0 0 0 0
Andrew J. Mayer, Jr 2002 0 0 0 0
Vice President- 2001 0 0 0 0
Finance, Chief 2000 0 0 0 0
Financial Officer
and Secretary
(a) Bonuses awarded to the Chief Executive Officer and the
Named Executive Officer for Fiscal 2002 were the first bonuses paid
to either Officer since 1997. The bonuses approximates 40% of the
difference between (a) actual salary received from the Company for
the years 1992 and 2000, and (b) the sum of the amount their
adjusted salary would have equaled for each of the years 1992
through 2000 if escalated for increases in the consumer price
index.
(b) 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 2002, Fiscal 2001 and
Fiscal 2000. In each of Fiscal 2002, Fiscal 2001 and Fiscal 2000,
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.
(c) 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 and the
Significant Employee during Fiscal 2002: (a) the number of options
granted; (b) the percent the grant represents of total options
granted to employees during Fiscal 2002; (c) the per-share exercise
price of the options granted; and (d) the expiration date of the
options.
OPTION/SAR GRANTS IN FISCAL 2002
% 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
Samuel N. Barresi** 0 N/A N/A N/A
*No SARs have been issued by the Company.
**Mr. Barresi's employment with the Company ended on April 4,
2003.
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 2002 by
the Chief Executive Officer and the Named Executive Officer and the
Significant Employee; (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 2002; 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 2002.
AGGREGATED OPTION/SAR EXERCISES IN FISCAL 2002
AND FISCAL YEAR-END OPTION/SAR VALUES
Number of
Unexercised
Options/SARs* at
Fiscal Year-End(#)
Shares Acquired Exercisable/
Name on Exercise (#) Value Realized($) Unexercisable
Robert V. Silva 0 N/A 0/0
Andrew J. Mayer, Jr. 0 N/A 5,000/0
Samuel N. Barresi** 0 N/A 0/0
Value of Unexercised
In-the-Money
Options/SARs* at
Fiscal Year-End($)
Exercisable/
Unexercisable
Robert V. Silva 0/0
Andrew J. Mayer, Jr. 0/0
Samuel N. Barresi** 0/0
* No SARs have been issued by the Company.
* Mr. Barresi's employment with the Company ended on April 4,
2003.
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 2002, Arthur C.
Holdsworth, III earned fees of $8,500.
Part III, Item 11. Security Ownership of Certain Beneficial Owners
and Management.
As of the close of business on March 21, 2003, 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 21 2003, 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");
(5) the significant employee; and
(6) all officers, directors and significant employee 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%
3 Timber Ridge Rd.
Far Hills, NJ 07931
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 73,150 (e) 2.4%
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) 0.8%
200 Centennial Avenue
Piscataway, NJ 08854
Samuel N. Barresi 8,000 0.3%
200 Centennial Avenue
Piscataway, NJ 08854
All executive officers 150,250 (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 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 expired during March 2003, 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.
Securities Authorized for Issuance Under Equity Compensation Plans
The following table sets forth as of December 31, 2002 the
number of shares of the Company's common stock, the Company's only
class of equity securities, issuable upon exercise of outstanding
options, warrants and other rights, the weighted average exercise
price of such options, warrants and other rights and the number of
shares of common stock available for future issuance pursuant to
all "equity compensation plans" relating to our common stock.
Equity compensation plans include those approved by our
shareholders, as well as those not approved by our shareholders,
including individual compensation arrangements with one or more of
our officers or directors.
Equity Compensation Plan Information
Plan category Number of Weighted-average Number of
securities exercise price securities
to be issued of outstanding remaining
upon exercise options warrants available
of outstanding and rights for future
options, issuance
warrants and
rights
Equity compen- -0- -0- -0-
sation plans not
approved by
security holders
Equity compen-
sation plans
approved by
security holders 5,000 (a) $0.44 792,000
Total 5,000 $0.44 792,000
(a) Expired during March 2003.
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. As of December 31, 2002 the
Company's accounts include a receivable, created prior to July
2002, of $21,000 for unreimbursed sundry expenses paid on behalf
of the President and Chairman of the Board, and his affiliates.
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 $1,000 and $11,000 for the years ended December 31,
2002 and 2001, respectively.
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 balance sheet. 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 III, Item 13. Exhibits and Reports on Form 8-K.
Exhibits
The exhibits to this report are listed in the Exhibit Index
on pages 43 to 47.
Reports on Form 8-K
The Company filed a report on Form 8-K dated October 31,
2002 to announce the preliminary findings of the arbitrator in
the arbitration regarding a 1997 Settlement among SCA Services,
Inc., the Company and others.
Part III, Item 14. Controls and Procedures.
a) Evaluation of disclosure controls and procedures. Based upon
their evaluation as of a date within 90 days of the filing date
of this Annual Report on Form 10-KSB, our principal executive
officer and principal financial officer have concluded that our
disclosure controls and procedures (as defined in Rules 13a-14(c)
and 15d-14(c) under the Securities and Exchange Act of 1934 (the
"Exchange Act")) are effective to ensure that information
required to be disclosed by us in reports that we file or submit
under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in Securities and
Exchange Commission rules and forms.
b) Changes in internal controls. There were no significant
changes in our internal controls or in other factors that could
significantly affect these controls subsequent to the date of the
evaluation referenced in the preceding paragraph, including any
corrective actions with regard to significant deficiencies and
material weaknesses.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Dated: April 15, 2003 TRANSTECH INDUSTRIES, INC.
(Registrant)
By:
/s/ Robert V. Silva
Robert V. Silva, President and
Chief Executive Officer
and Director
(Principal Executive Officer)
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 registrant and in the capacities and on
the dates indicated:
April 15, 2003 /s/ Robert V. Silva
Robert V. Silva, President and
Chief Executive Officer and Director
(Principal Executive Officer)
April 15, 2003 /s/ Andrew J. Mayer, Jr.
Andrew J. Mayer, Jr.
Vice President-Finance, Chief
Financial Officer, Secretary and
Director (Principal Financial and
Accounting Officer)
CERTIFICATIONS
I, Robert V. Silva, certify that:
1. I have reviewed this annual report on Form lO-KSB of Transtech
Industries, Inc.;
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for,
the periods presented in this annual report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules l3a-14 and
l5d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which
this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent
function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have
indicated in this annual report whether or not there were
significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the
date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material
weaknesses.
Date: April 15, 2003
/s/ Robert V. Silva
Robert V. Silva
President and Chief Executive Officer
and Director
(Principal Executive Officer)
CERTIFICATIONS
I, Andrew J. Mayer, Jr., certify that:
1. I have reviewed this annual report on Form IO-KSB of Transtech
Industries, Inc.;
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for,
the periods presented in this annual report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules l3a-14 and
l5d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which
this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent
function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have
indicated in this annual report whether or not there were
significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the
date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material
weaknesses.
Date: April 15, 2003
/s/ Andrew J. Mayer, Jr.
Andrew J. Mayer, Jr.
Vice President-Finance, Chief
Financial Officer, Secretary and
Director
(Principal Financial and Accounting Officer)
TRANSTECH INDUSTRIES, INC.
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 (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.
10(bf) Incentive Stock Option Plan of Transtech
Industries, Inc. dated November 8, 1985: See
"O" below.
11 Statement regarding computation of net loss
per share
13 Annual Report to Stockholders
40 - 94
21 Subsidiaries of the Registrant 95
23 Consent of Independent Certified Public
Accountants
99(a) Certification Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
99(b) Certification Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
"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, 2000
"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.
"O" Incorporated herein by reference to the
Company's Form S-8 dated April 3, 1987