SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission File No. 0-6512
TRANSTECH INDUSTRIES, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 22-1777533
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 Centennial Avenue, Piscataway, New Jersey 08854
(Address of principal executive offices)
(732) 981-0777
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act of 1934 during the past
12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED
IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the issuer filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after
the distribution of securities under a plan confirmed by a court.
Yes___ No___
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
2,829,190 shares of common stock, $.50 par value, outstanding as of
September 30, 1998. In addition, at such date, the issuer held
1,885,750 shares of common stock, $.50 par value, in treasury.
Transitional Small Business Disclosure Format
(Check One): Yes No X
Page 1 of 33 pages
Exhibit index on page 32
<PAGE>
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
FORM 10-QSB
FOR THE QUARTERLY PERIOD ENDED September 30, 1998
I N D E X
Page(s)
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets as of September 30,
1998 and December 31, 1997 3 - 4
Consolidated Statements of Operations for the 5
Nine Months Ended September 30, 1998 and 1997
Consolidated Statements of Operations for the
Three Months Ended September 30, 1998 and 1997 6
Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 1998 and 1997 7 - 8
Notes to Consolidated Financial Statements 9 - 13
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 14 - 25
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 26 - 29
Item 6. Exhibits and Reports on Form 8-K 30
SIGNATURES 31
EXHIBIT INDEX 32
EXHIBITS 33
<PAGE>
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
<TABLE>
CONSOLIDATED BALANCE SHEETS
(In $000's)
ASSETS
<CAPTION>
September 30, December 31,
1998 1997
(Unaudited)
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents $ 1,552 $ 311
Marketable securities 1,061 2,610
Accounts and notes receivable
(net of allowance for doubtful
accounts of $15) 281 125
Deferred income taxes 36 30
Prepaid expenses and other 337 331
Total current assets 3,267 3,407
PROPERTY, PLANT AND EQUIPMENT
Machinery and equipment 2,891 2,892
Less accumulated depreciation (2,779) (2,742)
Net property, plant and equipment 112 150
OTHER ASSETS
Notes receivable 170 178
Assets held for sale 1,313 1,581
Receivable, clay deposit 480 530
Escrowed funds from sale of
subsidiary 849 817
Deferred income taxes 302 302
Other 32 33
Total other assets 3,146 3,441
TOTAL ASSETS $ 6,525 $ 6,998
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Cont'd
<TABLE>
CONSOLIDATED BALANCE SHEETS, Cont'd
(In $000's)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
<CAPTION>
September 30, December 31,
1998 1997
(Unaudited)
CURRENT LIABILITIES
<S> <C> <C>
Current portion of long-term debt $ 24 $ 22
Accounts payable 156 256
Accrued income taxes and related
interest 4,095 4,192
Accrued miscellaneous expenses 643 157
Total current liabilities 4,918 4,627
OTHER LIABILITIES
Long-term debt 21 38
Accrued remediation and closure
costs 2,083 2,135
Total other liabilities 2,104 2,173
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $.50 par value,
10,000,000 shares authorized:
4,714,940 shares issued 2,357 2,357
Additional paid-in capital 1,516 1,516
Retained earnings 6,630 7,305
Net unrealized gains on marketable
securities 14 34
Subtotal 10,517 11,212
Treasury stock, at cost -
1,885,750 shares (11,014) (11,014)
Total stockholders' equity
(deficit) (497) 198
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT) $ 6,525 $ 6,998
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Cont'd
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
(In $000's, except per share data)
(Unaudited)
<CAPTION>
For the Nine Months Ended
September 30,
1998 1997
<S> <C> <C>
REVENUES $ 636 $ 309
COST OF OPERATIONS
Direct operating costs 444 295
Selling, general and
administrative expenses 1,195 1,636
Total cost of operations 1,639 1,931
INCOME (LOSS) FROM OPERATIONS (1,003) (1,622)
OTHER INCOME (EXPENSE)
Investment income (loss) 156 226
Interest expense (4) (4)
Interest related to income taxes
payable (251) (451)
Gain (loss) from sale of property 4 (33)
Miscellaneous income (expense) 75 58
Total other income (expense) (20) (204)
INCOME (LOSS) BEFORE INCOME TAXES
(CREDIT) (1,023) (1,826)
Income taxes (credit) (348) -
NET INCOME (LOSS) $ (675) $(1,826)
INCOME (LOSS) PER COMMON SHARE:
NET INCOME (LOSS) $(.24) $(.65)
NUMBER OF SHARES USED IN
CALCULATION 2,829,190 2,829,090
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Cont'd
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
(In $000's, except per share data)
(Unaudited)
<CAPTION>
For the Three Months Ended
September 30,
1998 1997
<S> <C> <C>
REVENUES $ 231 $ 107
COST OF OPERATIONS
Direct operating costs 124 116
Selling, general and
administrative expenses 371 590
Total cost of operations 495 706
INCOME (LOSS) FROM OPERATIONS (264) (599)
OTHER INCOME (EXPENSE)
Investment income (loss) 52 82
Interest expense (1) (1)
Interest related to income taxes
payable (80) (73)
Gain (loss) from sale of property 5 3
Miscellaneous income (expense) 40 18
Total other income (expense) 16 29
INCOME (LOSS) BEFORE INCOME TAXES
(CREDIT) (248) (570)
Income taxes (credit) (85) -
NET INCOME (LOSS) $ (163) $ (570)
INCOME (LOSS) PER COMMON SHARE:
NET INCOME (LOSS) $(.06) $(.20)
NUMBER OF SHARES USED IN
CALCULATION 2,829,190 2,829,090
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Cont'd
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In $000's)
(Unaudited)
<CAPTION>
For the Nine Months Ended
September 30,
1998 1997
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS:
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Cash received from customers $ 480 $ 322
Cash paid to suppliers and employees (1,378) (1,615)
Interest and dividends received 117 182
Interest paid (4) (4)
Other income received 270 58
Income taxes paid - (13)
Net cash provided by (used in)
operating activities (515) (1,070)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale and maturity
of marketable securities 1,520 3,125
Purchase of marketable securities - (3,001)
Purchase of property, plant and
equipment (6) (36)
Proceeds from sale of property,
plant and equipment 271 861
Collections of notes receivable 8 81
Rent sharing payments from
computer leases - 39
Net cash provided by (used in)
investing activities 1,793 1,069
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt (16) (14)
Payment of remediation and closure
costs (21) (10)
Net cash provided by (used in)
financing activities (37) (24)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 1,241 (25)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF THE YEAR 311 260
CASH AND CASH EQUIVALENTS AT END
OF THE QUARTER $1,552 $ 235
</TABLE>
<PAGE>
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Cont'd
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS, Cont'd
(In $000's)
(Unaudited)
<CAPTION>
For the Nine Months Ended
September 30,
1998 1997
RECONCILIATION OF NET INCOME (LOSS)
TO NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES:
<S> <C> <C>
NET INCOME (LOSS) $ (675) $(1,826)
ADJUSTMENTS TO RECONCILE NET INCOME
(LOSS) TO NET CASH PROVIDED BY
(USED IN) OPERATING ACTIVITIES:
Depreciation and amortization 44 42
(Gain) loss on sale of property,
plant and equipment (4) 33
Increase (decrease) in deferred
income taxes 3 (838)
(Increase) decrease in assets:
Accounts and notes receivable,
-net (156) 1
Prepaid expenses and other (36) 30
Write-down of receivable, clay deposit 50 -
Escrowed funds from sale of subsidiary (32) (33)
Increase (decrease) in liabilities:
Accounts payable and accrued
expenses 388 245
Accrued income taxes and related
interest (97) 1,276
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES $ (515) $(1,070)
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Cont'd
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1998
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying financial statements are presented in
accordance with the requirements of Form 10-QSB and consequently do
not include all of the disclosures normally required by generally
accepted accounting principles or those normally made in the
Company's annual Form 10-KSB filing. Accordingly, the reader of
this Form 10-QSB may wish to refer to the Company's Form 10-KSB for
the year ended December 31, 1997 for further information.
The financial information has been prepared in accordance with
the Company's customary accounting practices except for certain
reclassifications to the 1997 financial statements in order to
conform to the presentation followed in preparing the 1998
financial statements. Quarterly financial information has not been
audited. In the opinion of management, the information presented
reflects all adjustments necessary for a fair statement of interim
results. All such adjustments are of a normal and recurring nature
except as disclosed herein.
NOTE 2 - MARKETABLE SECURITIES
The Company classifies all equity securities and debt
securities purchased with remaining maturities of less than two
years as available-for-sale securities. Available-for-sale debt
securities are carried at amortized cost, which approximates fair
value because of their short term to maturity. At September 30,
1998, available-for-sale debt securities consisted of $1,000,000 of
U.S. Government Securities with maturities through April 1999.
Available-for-sale equity securities are carried at fair value as
determined by quoted market prices. The portfolio of available-
for-sale equity securities had a cost of $38,000 and a market value
of $61,000 as of September 30, 1998. The aggregate excess of market
value over cost of such securities as of September 30, 1998 of
$23,000 is presented as a separate component of stockholders'
equity less deferred income taxes of $8,000. The excess of fair
value over cost consisted of gross unrealized gains of $48,000 and
gross unrealized losses of $25,000 as of September 30, 1998. The
cost of marketable securities sold is determined on the specific
identification method and realized gains and losses are reflected
in income. Proceeds from sale of available-for-sale securities
during the nine months ended September 30, 1998 amounted to
$1,520,000. Dividend and interest income is accrued as earned.
NOTE 3 - ASSETS HELD FOR SALE
Assets held for sale consist primarily of real estate which is
carried at a cost of $1,313,000 as of September 30, 1998. The real
estate included in this category as of September 30, 1998 consists
of approximately 430 acres in Deptford, N.J., including
approximately 100 acres upon which a landfill owned and previously
operated by the Company's subsidiary, Kinsley's Landfill, Inc., is
situated. The Company is pursuing the disposition of these
properties. However, based upon market conditions for real estate
of this type, the Company is unable to determine when such sales
will be consummated.
During March 1998, the Company sold approximately two acres of
property in Readington Township, N.J., classified as assets held
for sale, for net proceeds after expenses of $267,000. No gain or
loss related to the sale has been reported since the proceeds
approximated the carrying value of the property.
NOTE 4 - RECEIVABLE, CLAY DEPOSIT
In 1988, Kin-Buc, Inc. ("Kin-Buc") purchased 150,000 cubic
yards of clay for use in the closure of the Kin-Buc Landfill for
$1.2 million from Inmar Associates, Inc. ("Inmar"), a corporation
owned and controlled by a former principal shareholder, director
and officer of the Company, and applied this amount against its
accrual for remediation and closure costs. In 1992, the Company
reclassified approximately $1.1 million of this accrual,
representing the cost of the clay not required for such closure, to
other long-term assets, recognizing the Company's plan to market
the clay to third parties. Pursuant to the agreement for the
purchase of the clay, Kin-Buc was entitled to a refund of the
purchase price of clay it was unable to mine or could not use. In
October 1996, the Company learned that Inmar had contracted to sell
a substantial portion of its land, upon which a substantial portion
of the clay is situated. In November 1996, Kin-Buc brought suit
against Inmar and the prospective buyer. For a discussion of this
suit, see Item 1 of Part II of this Form 10-QSB. In January 1997,
the closing of the sale took place and in accordance with a court
order entered in another suit against Inmar, the net proceeds of
the sale were paid into the Court. In August 1997, Kin-Buc
received a $1.1 million default judgment against Inmar. In August
1998, in response to an application made by Inmar, the Court
terminated the order which mandated the payment of the proceeds
into the Court. However, the proceeds presently remain deposited
with the Court. These proceeds are substantially less than Kin-
Buc's judgment against Inmar.
During the fourth quarters of 1997 and 1996, the Company
charged $47,000 and $500,000, respectively, to operations to reduce
the carrying value of this asset to management's best estimate of
the values it may ultimately realize from resolution of these
matters, considering the amount of the proceeds held by the Court
and assuming the Company will be able to recover such proceeds.
In October, 1998 the Company entered into an agreement with
Inmar, its owner and certain affiliates which resolved the many
issues in dispute among the parties, including a resolution of the
judgment against Inmar. For a discussion of the agreement, see
Part II, Item 1. Legal Proceedings of this Form 10-QSB. The
Company agreed to vacate the judgment in exchange for $480,000 to
be paid to the Company from the funds deposited with the Court.
The Company and Inmar are pursuing the release of such funds. The
Company charged $50,000 to operations in the quarter ended
September 30, 1998 to reduce the carrying value of this asset to
$480,000.
NOTE 5 - INCOME TAXES
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. The Company filed a petition with the Tax Court contesting
many of the proposed adjustments asserted in the deficiency notice.
For a discussion of this matter, see "Taxes" contained in
Management's Discussion and Analysis of Financial Condition and
Results of Operations of this Form 10-QSB.
NOTE 6 - LONG-TERM DEBT
At September 30, 1998, long-term debt consisted of the following
(in $000's):
10.5% mortgage payable in $ 20
installments through April 2000;
secured by land and buildings
Other 25
Total long-term debt 45
Less: current portion (24)
$ 21
NOTE 7 - REMEDIATION AND CLOSURE COSTS
The Company and certain subsidiaries were previously active in
the resource recovery and waste management industries. These
activities included the hauling of waste and the operation of three
landfills. Although the sites are now closed, the Company
continues to own the sites and to remediate two of them, and has
both incurred, and accrued for, substantial costs associated
therewith.
The Company's accruals for closure and remediation activities
equal the present value of its allocable share of the estimated
future costs related to a site less funds held in trust for such
purposes. Such estimates require a number of assumptions, and
therefore may differ from the ultimate outcome. The costs of
litigation associated with a site are expensed as incurred.
As of September 30, 1998, the Company has accruals totalling
$11.2 million for its estimated share of remediation and closure
costs in regard to the Company's former landfill operations, $9.1
million of which is held in trusts and maintained by trustees for
financing of the estimated $11.1 million required to fund the
closure plan related to the landfill owned by the Company's
subsidiary, Kinsley's Landfill, Inc.
On December 23, 1997, the Company entered into four agreements
which settled lawsuits related to the allocation of costs of
remediation of the landfill in Edison, New Jersey owned and
operated by Kin-Buc, Inc., a wholly-owned subsidiary of the
Company, and which substantially relieved the Company from future
obligation with respect to the site. The Kin-Buc Landfill ceased
operations in 1977. The Company and other respondents have been
remediating the Kin-Buc Landfill under an Amended Unilateral
Administrative Order issued by the United States Environmental
Protection Agency (the "EPA") in September 1990. In November 1992,
EPA issued an Administrative Order for the remediation of certain
areas neighboring the Kin-Buc Landfill.
Kin-Buc, Inc. had accrued approximately $10.7 million for its
share of the costs of such remediation and closure. The Company
has reversed the accrual as a result of the December 1997
settlements and recognized income of $10.6 million in the year
ended December 31, 1997 due to the elimination of such accrual.
The impact of future events or changes in environmental laws
and regulations, which cannot be predicted at this time, could
result in material increases in remediation and closure costs
related to the Company's past waste related activities, possibly in
excess of the Company's available financial resources. A
significant increase in such costs could have a material adverse
effect on the Company's financial position, results of operations
and net cash flows.
NOTE 8 - LEGAL PROCEEDINGS
See Item 1 of Part II of this Form 10-QSB for a discussion of
recent developments with respect to the Company's legal matters.
<PAGE>
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Cont'd
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The nine months ended September 30, 1998 compared to the nine
months ended September 30, 1997
Consolidated revenues by business segment for the nine months
ended September 30, 1998 and 1997 were as follows (in $000):
1998 1997
Electricity Generation $ 206 $224
Environmental Services 857 665
Subtotal 1,063 889
Intercompany (427) (580)
Total $ 636 $309
Consolidated net revenues for the nine months ended September
30, 1998 were $636,000, an increase of $327,000 or 106% compared to
the same period of 1997.
Revenues from the operation which generates electricity using
methane gas as fuel were $206,000 for the nine months ended
September 30, 1998, a decrease of $18,000 or 8% compared to the
same period of the prior year. The electricity generating facility
consists of four diesel/generating units each capable of generating
approximately 48,000 kwh/day at full capacity. Methane gas is a
component of the landfill gas generated by a landfill site owned by
the Company. Engineering studies indicate sufficient quantities of
gas at the landfill to continue the operation of the facility for
approximately 14 years. Electricity generated is sold pursuant to
a long term contract with a local utility. Revenues are a function
of the number of kilowatt hours sold, the rate received per
kilowatt and capacity payments. The Company sold 7.0 million kwh
during the nine months ended September 30, 1998 compared to 7.8
million kwh sold in the same period of the prior year. The
combined rate received (per Kilowatt and capacity payment)
increased 1.8% in the current period when compared to the
comparable period last year.
The environmental services segment reported $857,000 of gross
operating revenues for the nine months ended September 30, 1998
(prior to elimination of intercompany sales) compared to $665,000
for the period in 1997, an increase of 29%. Approximately $427,000
or 50% of the environmental services segment's revenues for the
period, compared to $580,000 or 87% for last year, were for
services provided to other members of the consolidated group and
therefore eliminated in consolidation. Third party sales during
the period in 1998 and 1997 were $430,000 and $85,000,
respectively.
Consolidated direct operating costs for the nine months ended
September 30, 1998 were $444,000, an increase of $149,000 or 51%
from $295,000 for the same period in 1997. The costs of the
electricity generating operation decreased 5% for the nine months
ended September 30, 1998 when compared to the same period in 1997
due to a decrease in repair and maintenance costs incurred for the
electric generating equipment. Costs of the environmental services
segment increased approximately 322% overall due to the increase in
sales volume.
Consolidated selling, general and administrative expenses for
the nine months ended September 30, 1998 were $1,195,000, a
decrease of $441,000 or 27% from $1,636,000 for the same period in
1997. The decrease was primarily due to a decrease in professional
fees and expenses incurred with respect to the Company's
environmental litigation. Significant professional fees and
administrative costs continue to be incurred in support of the
Company's ongoing litigation, marketing and asset divestiture
efforts (see Liquidity and Capital Resources - Liquidity).
The Company's consolidated operating loss for the nine months
ended September 30, 1998 decreased to $1,003,000 from a loss of
$1,622,000 for the same period in 1997.
Consolidated investment income decreased by $70,000 to
$156,000 for the nine months ended September 30, 1998 from $226,000
for the comparable period last year.
Consolidated interest expense of $4,000 for the nine months
ended September 30, 1998 was unchanged from that reported for the
same period last year.
Interest expense reported as "Interest related to income taxes
payable" represents the increase in the amount of interest accrued
on estimated income taxes payable as a result of the Company's tax
litigation discussed below. Such interest expense for the nine
months ended September 30, 1998 was $251,000 versus $451,000
reported for the comparable period in 1997.
The consolidated gain (loss) on sale of property for the nine
months ended September 30, 1997 includes a loss of $64,000 with
respect to the sale in May 1997 of approximately 95 acres of
property. The gain (loss) on sale of property reported for the
nine months ended September 30, 1997 also includes $28,000 of
deferred income associated with a 1992 installment sale of real
property.
Consolidated miscellaneous income for the nine months ended
September 30, 1998 increased $17,000 to $75,000 when compared to
the same period of 1997. Miscellaneous income for the period in
1998 includes income of $219,000 in recognition of a royalty
payment received from the lessee of certain of the Company's real
property situated beneath the lessee's landfill. The payment,
which is reported net of a fee payable pursuant to a consulting
agreement executed in 1982, was made from income earned by the
lessee which was escrowed during the 1980's and recently released
from escrow. In October, 1998 the Company entered into an
agreement which resolved issues in dispute among the Company, a
former principal shareholder, director and officer of the Company
and certain entities affiliated with him. These parties also
assigned to the Company their rights as insureds and claimants
under insurance policies now the subject of litigation initiated by
the Company. Miscellaneous income for the period in 1998 includes
charges totaling $195,000 related to such agreement; a charge of
$50,000 to reduce the carrying-value of the Company's receivable
for certain clay deposits and a charge of $145,000 in recognition
of certain obligations assumed by the Company related to the
agreement. See Part II, Item 1. Legal Proceedings of this Form 10-
QSB for a discussion of the agreement.
The consolidated loss before income tax credits was $1,023,000
for the nine months ended September 30, 1998, compared to a loss of
$1,826,000 for the same period last year.
Income tax credit for the nine months ended September 30, 1998
equalled $348,000. No provision for taxes has been recognized for
the same period of 1997.
Consolidated net loss for the nine months ended September 30,
1998 was $675,000 or $.24 per share, compared to net loss of
$1,826,000, or $.65 per share, for the nine months ended September
30, 1997.
The three months ended September 30, 1998 compared to the
three months ended September 30, 1997
Consolidated revenues by business segment for the three months
ended September 30, 1998 and 1997 were as follows (in $000):
1998 1997
Electricity Generation $ 72 $ 72
Environmental Services 351 163
Subtotal 423 235
Intercompany (192) (128)
Total $231 $107
Consolidated net revenues for the three months ended September
30, 1998 were $231,000, an increase of $124,000 or 116% compared to
the same period of 1997.
Revenues from the operation which generates electricity using
methane gas as fuel were $72,000 for the three months ended
September 30, 1998, unchanged from the same period of the prior
year. The Company sold 2.0 million kwh during the three months
ended September 30, 1998 compared to 2.3 million kwh sold in the
same period of the prior year. The combined rate received per
Kilowatt and capacity payment increased 18% in the current period
when compared to the comparable period last year.
The environmental services segment reported $351,000 of gross
operating revenues for the three months ended September 30, 1998
(prior to elimination of intercompany sales) compared to $163,000
for 1997, an increase of 115%. Approximately $192,000 or 55% of
the environmental services segment's revenues for the period,
compared to $128,000 or 79% for last year, were for services
provided to other members of the consolidated group and therefore
eliminated in consolidation. Third party sales during the period
in 1998 and 1997 were $159,000 and $35,000, respectively.
Consolidated direct operating costs for the three months ended
September 30, 1998 were $124,000 an increase of $8,000 or 7% when
compared to $116,000 for the same period in 1997. The costs of the
electricity generating operation decreased for the three months
ended September 30, 1998 when compared to the same period in 1997
due to decrease in repair and maintenance costs related to the
electric generating equipment. Costs of the environmental services
segment increased due primarily to the increase in sales volume.
Consolidated selling, general and administrative expenses for
the three months ended September 30, 1998 were $371,000, a decrease
of $219,000 from $590,000 for the same period in 1997. The
decrease was primarily due to lower professional fees and expenses
incurred with respect to the Company's environmental litigation.
The Company's consolidated operating loss for the three months
ended September 30, 1998 decreased to $264,000 from a loss of
$599,000 for the same period in 1997.
Consolidated investment income decreased by $30,000 to $52,000
for the three months ended September 30, 1998 from $82,000 for the
comparable period last year.
Consolidated interest expense of $1,000 for the three months
ended September 30, 1998 was unchanged from the same period last
year.
Interest expense reported as "Interest related to income taxes
payable" for the three months ended September 30, 1998 was $80,000
versus $73,000 reported for the comparable period in 1997.
The consolidated gain (loss) on sale of property for the three
months ended September 30, 1998 increased to $5,000 from $3,000
reported for the comparable period of 1997.
Consolidated miscellaneous income for the three months ended
September 30, 1998 increased $22,000 to $40,000 when compared to
the same period of 1997. The amount reported for the period in
1998 includes $219,000 of royalty income and $195,000 of charges
related to a settlement agreement entered into in October 1998
disclosed in the preceding discussion of results for the nine month
period of 1998.
The consolidated loss before income tax credits was $248,000
for the three months ended September 30, 1998, compared to a loss
of $570,000 for the same period last year.
Income tax credit for the three months ended September 30,
1998 equalled $85,000. No provision for taxes has been recognized
for the same period of 1997.
Consolidated net loss for the three months ended September 30,
1998 was $163,000 or $.06 per share, compared to net loss of
$570,000, or $.20 per share, for the three months ended September
30, 1997.
Liquidity and Capital Resources
Liquidity
Net cash used in operating activities for the nine months
ended September 30, 1998 decreased to $515,000 from $1,070,000 when
compared to the same period last year. Net cash provided by
investing activities increased for the current period to $1,793,000
from $1,069,000 reported for the same period of last year. The
amount of cash used in financing activities increased to $37,000
from $24,000 for the same period last year. Funds held by the
Company in the form of cash and cash equivalents increased as of
September 30, 1998 to $1,552,000 from $235,000 as of September 30,
1997. The sum of cash, cash equivalents and marketable securities
as of September 30, 1998 decreased $1,300,000 to $2,613,000 when
compared to September 30 of last year.
Working capital deficit was $1,651,000 and the ratio of
current assets to current liabilities was .66 to 1 as of September
30, 1998, versus $1,220,000 and .74 to 1 as of December 31, 1997.
THE COMPANY FACES SIGNIFICANT SHORT-TERM AND LONG-TERM CASH
REQUIREMENTS FOR (i) FEDERAL AND STATE INCOME TAX OBLIGATIONS
DISCUSSED BELOW, MOST OF WHICH WILL BECOME DUE FOLLOWING THE
CONCLUSION OF THE TAX COURT CASE WITH THE INTERNAL REVENUE SERVICE
(THE "SERVICE") OF THE COMPANY'S TAX LIABILITY FOR THE YEARS 1980
THROUGH 1991 (AS DISCUSSED BELOW, THE COMPANY ANTICIPATES THAT A
FINAL SETTLEMENT WILL BE CONCLUDED DURING THE NEXT QUARTER), (ii)
FUNDING ITS PROFESSIONAL AND ADMINISTRATIVE COSTS, AND (iii)
FUNDING REMEDIATION COSTS ASSOCIATED WITH SITES OF PAST OPERATIONS.
The Company has accrued $4.0 million through September 30,
1998 with respect to the federal and state income tax obligations.
This estimated amount exceeds the Company's current liquid assets.
Although the Company continues to pursue the sale of property
held for sale and claims against insurance carriers for recoveries
of past remediation costs, no assurance can be given that the
timing and amount of the proceeds from such sources will be
sufficient to meet the capital 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 capital requirements, including its estimated
tax liabilities. In the event of an unfavorable resolution of the
insurance litigation, or the proceeds of asset sales are
insufficient to meet the Company's future capital requirements,
including its tax liabilities, then, if other alternatives are
unavailable at that time, the Company will be forced to consider a
plan of liquidation of its remaining assets, whether through
bankruptcy proceedings or otherwise.
In addition, the Company's past participation in the waste
handling and disposal industries subjects the Company to future
events or changes in environmental laws or regulations, which
cannot be predicted at this time, which could result in material
increases in remediation and closure costs, and other potential
liabilities that may ultimately result in costs and liabilities in
excess of its available financial resources.
Taxes
As discussed in greater detail below, the Company is currently
litigating with the Service in Tax Court over its tax liability for
taxable years 1980-88. Certain issues from taxable years 1989-91
are also part of the Tax Court litigation because losses from those
years were carried back to 1988. Taking into account the partial
settlements that have been reached through January 22, 1998 of all
but one of the adjustments asserted by the Service and the
Service's oral agreement to concede the one as yet unsettled issue
in the case, and taking into account available net operating losses
and tax credits as of September 30, 1998, the Company expects to
owe approximately $1.5 million of federal income tax and $127,000
of state income tax and $2.5 million of federal interest,
calculated through September 30, 1998, at the conclusion of Tax
Court litigation. (The tax liability estimates presented herein
exclude penalties. The Service has conceded all of the penalties
that it had asserted in the Tax Court litigation, but state tax
authorities may assert that penalties are due.)
In 1991, 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. In 1994, the Company
filed a petition with the Tax Court contesting many of the
adjustments asserted in the deficiency notice. On June 5, 1995,
August 14, 1995, March 7, 1996, July 31, 1996 and January 22, 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 to the third revised
stipulation of settlement. These partial settlements resolved all
but one of the adjustments asserted in the deficiency notice.
Taking into account the settlements to date, the Company has
accepted approximately $5.9 million of the $33.3 million of total
adjustments to income asserted by the Service for the 1980-88
period. Many of the adjustments accepted by the Company relate to
issues on which the Service would likely have prevailed in Tax
Court. The Service has conceded adjustments totalling $26.7 million
of taxable income and $2.5 million of penalties, leaving only one
issue, involving several taxable years, unresolved from the 1980-88
period. The remaining issue in the case relates to the timing of
significant deductions that were taken by the Company for certain
landfill closing costs in several taxable years from the 1980-88
period. The service has orally agreed to concede this issue. The
Company therefore expects to enter into an additional stipulation
with the Service in which the Service would agree to this
concession in writing.
All of the adjustments from the 1989-91 period were settled in
the revised stipulations of partial settlement, except for the
adjustment relating to computer equipment acquired in 1989. The
computer leasing issue was settled in the supplement to the third
stipulation of settlement that was executed on January 22, 1998.
The computer equipment issue was resolved by the Company agreeing
to the disallowance of approximately $3.8 million of deductions for
1989 and no other adjustments to deductions or income in respect of
the computer equipment transaction for 1989 or subsequent years.
The Company has net operating loss and tax credit
carryforwards and carrybacks that will partly offset the tax
liability resulting from the settled adjustments to taxable income.
Taking into account such carryforwards and carrybacks, the
estimated federal income tax and interest that is owed on account
of the settlements reached to date is approximately $4.0 with
interest through September 30, 1998 ($1.5 million of taxes and $2.5
million of interest). The settlements also will result in
approximately $237,000 of state income tax (not including penalties
and penalty interest that may be assessed) $110,000 of which was
paid to one state during the second quarter of 1996. This state
had a tax amnesty program in effect pursuant to which all interest
and penalties for back taxes were waived upon payment of the tax
liability. In conjunction with the $110,000 payment, the Company
reversed approximately $240,000 of interest that was previously
accrued on the $110,000 tax liability. Payment of the federal tax
liability and the remaining state tax liability from both the
settled issues and the remaining unsettled issue will be due after
the conclusion of the Tax Court case. The above $4.0 million
estimated tax liability to be paid at that time (plus additional
interest from October 1, 1998 forward) exceeds the Company's
current liquid assets (i.e., cash and marketable securities).
Remediation and Closure Costs
As of September 30, 1998, the Company has accrued $11.2
million for its estimated share of remediation and closure costs
related to the Company's former landfill and waste handling
operations. Approximately $9.1 million is held in trust and
maintained by trustees for the post-closure activities of one site
located in Deptford, New Jersey (see Note 7 to the Company's
Consolidated Financial Statements).
The Company and other responsible parties have been
remediating the Kin-Buc Landfill, located in Edison, New Jersey,
under an Amended Unilateral Administrative Order issued by the
United States Environmental Protection Agency ("EPA") in September
1990. In November 1992, EPA issued an Administrative Order for the
remediation of certain areas neighboring the Kin-Buc Landfill. The
Company initiated a suit in 1990 against generators and
transporters of waste deposited at a site with the intent of
obtaining contribution toward the cost of remediation. On December
23, 1997, the Company entered into four agreements which settled
lawsuits related to the allocation of costs of remediation of the
Kin-Buc Landfill and substantially relieved the Company from future
obligation with respect to the site.
The Company carried an accrued remediation liability of
approximately $10 million related to the Kin-Buc Landfill,
essentially all of which has been reversed as a result of the
settlements described above. The Company recognized income in an
amount equal to the reduction of such accrued remediation liability
in the year ended December 31, 1997.
The substantial expense of the Company's prosecution and
defense of claims in the litigation relating to the Kin-Buc
Landfill as well as the substantial expense of the Company's
efforts in respect to the settlements described above, which the
Company has incurred through 1997, will no longer be borne by the
Company. There may be some continuing expenses in respect of the
Kin-Buc Landfill, but not of the magnitude experienced in the past.
Assets Held for Sale/Claims for Past Remediation Costs
Assets held for sale consist primarily of real estate which is
carried at a cost of $1,313,000 and $1,581,000 as of September 30,
1998 and December 31, 1997, respectively. The real estate included
in this category as of December 31, 1997 consisted of approximately
430 acres located in Deptford, N.J. (including approximately 100
acres upon which the landfill owned and operated by the Company's
subsidiary Kinsley's Landfill, Inc. is situated) and approximately
two acres located in Readington Township, N.J. During the fourth
quarter of 1997 the Company charged $33,000 to operations to reduce
the carrying value of the Readington Township, N.J. property to
$268,000, the approximate proceeds received by the Company from the
March 1998 sale of such property. The Company is actively pursuing
the disposition of the remaining properties. However, based upon
market conditions for real estate of this type the Company is
unable to determine when such sales will ultimately be consummated.
In 1995, the Company commenced suit to obtain indemnification
from its excess insurers during the period 1965 through 1986
against costs incurred in connection with the remediation of the
Kin-Buc Landfill, a site located in Piscataway, N.J., and for the
defense of litigation related thereto. The defendant insurers,
which include various London and London Market insurance companies,
First State Insurance Company and International Insurance Company,
have answered the complaint against them and discovery is
proceeding. All of the policies of excess insurance issued by the
defendant insurers name Transtech, its present subsidiaries and
former subsidiaries, some of which Transtech no longer controls, as
insureds. They also cover companies presently or formerly owned or
controlled by a former principal shareholder, director and officer
of the Company. In October 1998, such parties have assigned their
rights as holders and claimants under these policies to the Company
(see Part II - Item 1. Legal Proceedings).
The Company can not assure that the timing and amount of the
net proceeds from the sale of such assets held for sale and the
successful litigation or settlement of the insurance claims will be
sufficient to meet the capital requirements of the Company
discussed above.
On June 30, 1998 Kinsley's Landfill, Inc. ("Kinsley"), a
subsidiary of the Company entered into two agreements with respect
to its electricity generation operations. Pursuant to a Gas Lease
and Easement Agreement (the "Gas Lease"), Kinsley granted to the
lessee the exclusive right to extract and utilize all gas produced
at the landfill site for an initial lease term of 12 years with
provisions for two 5 year extensions. The Gas Lease requires the
lessee to make an initial payment of $10,000 and additional
quarterly payments of $75,000 beginning January 1, 1999 through
December 31, 2007.
Pursuant to a landfill gas sale agreement (the "Gas Sale
Agreement") Kinsley has agreed to purchase gas from the lessee for
$.10 per million BTU's of gas. This Gas Sale Agreement will
terminate upon the expiration of the Gas Lease or Kinsley's sale of
its electric generators.
Amounts due to and by Kinsley's for the period ending
September 30, 1998 has not been determined, however, the Company
believes the amounts will be comparable resulting in a nominal
amount net due to or by Kinsley's.
In connection with these agreements, Kinsley is actively
negotiating separate agreements for the sale of its electric
generators, together with operation and maintenance agreements
pursuant to which Kinsley would service, for a fee, the electric
generators for the purchaser and the gas collection system for the
benefit of the lessee, and assign its rights under the Gas Sale
Agreement.
Year 2000 Data Conversion
The Company does not anticipate any significant disruption to
business operations due to Year 2000 software failures. The
Company does not know the extent to which its customers may be
affected by such failures.<PAGE>
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
In 1988 the Company's subsidiary, Kin-Buc, Inc. ("Kin-Buc")
purchased 150,000 cubic yards of clay for use in the closure of the
Kin-Buc Landfill for $1.2 million from Inmar Associates, Inc.
("Inmar"), a corporation owned and controlled by Marvin H. Mahan,
a former principal shareholder, director and officer of the
Company. The agreement for the purchase of the clay provided that
Kin-Buc would be entitled to a refund of the purchase price of clay
it was unable to use. The Company used a small portion of the clay
and was planning to sell the remainder to third parties.
In May 1996 Inmar applied to the Superior Court, Essex County,
New Jersey for an order vacating a 1983 order of that Court in a
suit entitled State of New Jersey, Department of Environmental
Protection v. Inmar Associates et al., Docket No. C-1852-83E. That
order prohibited Inmar from selling its real property until all of
Inmar's and Mahan's obligations for the environmental cleanup of a
site in Carlstadt, New Jersey are fulfilled. In August 1996 the
Superior Court denied Inmar's application for relief from the 1983
order, but permitted it to reapply if a sale of a specific piece of
real property was upcoming.
In October 1996 Kin-Buc learned that Inmar had contracted to
sell a substantial portion of its land in Edison, New Jersey, upon
which a substantial amount of the clay is situated, to Edison
Expansion, Inc. ("Expansion"), an unrelated company. In November
1996 Inmar reapplied to the Superior Court for permission to
complete this sale and Kin-Buc brought suit entitled Kin-Buc, Inc.
v. Inmar Associates, Inc. and Edison Expansion, Inc., Docket No.
MRS-C-249-96, in Superior Court, Morris County, New Jersey against
Inmar and Expansion for, among other things, a declaratory judgment
that Kin-Buc's rights in the clay would survive a sale of the land
to Expansion, and, alternatively, a money judgment against Inmar.
Inmar's reapplication for relief from the 1983 order had been
moved, on the Court's motion, to the Superior Court, Morris County,
where Kin-Buc's action was pending.
In December 1996 the Superior Court permitted Inmar to sell
the land to Expansion, but ordered that the net proceeds of the
sale be paid into the Court to secure the fulfillment of any
Carlstadt cleanup obligations which Inmar or Mahan may be held
liable to perform. Inmar appealed this order to the Appellate
Division of the Superior Court. A closing of the sale of the land
<PAGE>
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS Cont'd
to Expansion took place in January 1997, and the net proceeds of
the sale, totalling approximately $530,000, were paid into the
Superior Court pending the outcome of Inmar's appeal.
In August 1997 Kin-Buc obtained a default judgment against
Inmar in the amount of approximately $1.1 million, representing a
refund of the purchase price of the clay Kin-Buc did not use. In
October 1997 the Superior Court dismissed Kin-Buc's suit against
Expansion, recognizing that Kin-Buc had already obtained a remedy
in the form of a money judgment against Inmar.
In April 1998 the Appellate Division ruled on Inmar's appeal
of the December 1996 order which provided, among other things, for
payment into the Superior Court of the proceeds of the sale of
Inmar's land. Referring to a specific section of the State's
environmental laws, the Appellate Division remanded Inmar's
application for relief from the 1983 order for consideration of
whether four specific methods of securing the fulfillment of
cleanup obligations set forth in that section are the only
permissible methods of securing such obligations. In June 1998
Inmar applied to the Superior Court, on remand, for an order
vacating the December 1996 order, releasing the proceeds of the
sale of Inmar's land and removing the prohibition on the sale of
Inmar's other real property imposed by the 1983 order.
On August 3, 1998 the Superior Court granted Inmar's
application and vacated its December 1996 order, released the
proceeds and removed the prohibition on the sale of Inmar's other
real property. As of November 12, 1998, the proceeds were still on
deposit with the Superior Court.
The Company has been negotiating with Inmar, Marvin H. Mahan
and Tang Realty, Inc. a corporation owned and controlled by Marvin
H. Mahan (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 Realty. Negotiations recently
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 $1.1 million judgment against Inmar and the Mahan
Interests' cooperation in the prosecution of the suit against
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS Cont'd
Transtech's insurers. In October, 1998 the Company entered into an
agreement with the Mahan Interests which resolved such disputes and
assigned to the Company all of the Mahan Interests', and certain
other insured entities' affiliated with the Mahan Interests, rights
as insureds and claimants under the excess insurance policies now
the subject of litigation initiated by the Company. The Company
agreed to vacate Kin-Buc's judgment in exchange for $480,000 which
is to be 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. The $200,000
payment will be paid in two equal installments. The first
installment is due when the Company receives the $480,000 from the
Superior Court and the second installment, which will be placed in
escrow when the funds are received from the Superior Court, is
payable when the Company receives payment for claims made against
the insurance carriers. The Company also agreed to indemnify Mr.
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
reimburse Mr. Mahan 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.
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. In 1994, the Company filed a petition with the Tax Court
contesting many of the proposed adjustments asserted in the
deficiency notice. On June 5, 1995, August 14, 1995, March 7,
1996, July 31, 1996 and January 22, 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 to the third revised stipulation of partial
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS Cont'd
settlement. These partial settlements resolved all but one of the
adjustments asserted in the deficiency notice.
The Service's audit of the Company's 1989-91 federal income
tax returns, resulted in the Service's challenging the deductions
claimed by the Company in connection with its investment in
computer equipment under lease. The Service also asserted a number
of smaller adjustments which were settled in 1995 and 1996.
The stipulation of settlement executed on January 22, 1998 resolved
the computer equipment issue by the Company's agreeing to the
disallowance of approximately $3.8 million of deductions for 1989
and no other adjustments to deductions and income in respect of the
computer equipment transaction for 1989 or subsequent years.
The remaining issue in the case relates to the timing of
significant deductions taken by the Company for certain landfill
closing costs in several taxable years from the 1980-88 period.
The Service has orally agreed to concede this issue. The Company
therefore expects to enter into an additional stipulation with the
Service in which the Service would agree to this concession in
writing. See Part I, Item 2 Management's Discussion and Analysis
of Financial Condition and Results of Operations for a discussion
of the impact of the tax litigation on the Company's capital
resources.
The Company is a party to other pending legal proceedings, all
of which have been reported in the Company's Annual Report on Form
10-KSB for the fiscal year ended December 31, 1997 and Quarterly
Reports on Form 10-QSB for the quarters ended March 31, 1998 and
June 30, 1998. Reference is made thereto for a description of such
litigation.
<PAGE>
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART II - OTHER INFORMATION, Cont'd
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
Exhibit 11 - Computation of Earnings (Loss) Per Common Share
Exhibit 27 - Financial Data Schedule
b) Reports on Form 8-K
NONE
<PAGE>
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
TRANSTECH INDUSTRIES, INC.
(Registrant)
Date: November 16, 1998 By: /s/ Robert V. Silva
Robert V. Silva, President
and Chief Executive Officer
and
Date: November 16, 1998 By: /s/ Andrew J. Mayer, Jr.
Andrew J. Mayer, Jr.
Vice President-Finance, Chief
Financial Officer and Secretary
<PAGE>
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
FORM 10-QSB
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
EXHIBIT INDEX
EXHIBIT PAGE
NO. NO.
11 Computation of Earnings (Loss) Per Common Share 31
27 Financial Data Schedule N/A
Exhibit 11. Computation of Net Income (Loss) Per Share.
<TABLE>
TRANSTECH INDUSTRIES, INC.
COMPUTATION OF NET INCOME (LOSS) PER COMMON SHARE
<CAPTION>
For the Nine Months Ended
September 30,
BASIC: 1998 1997
<S> <C> <C>
Weighted Average Common Shares
Outstanding 2,829,190 2,829,090
Net Income (Loss) $(675,000) $(1,826,000)
Basic Net Income (Loss)
Per Common Share:
Net Income (Loss) per share $(.24) $(.65)
DILUTED:
Weighted Average Common
Shares Outstanding 2,829,190 2,829,090
Dilutive Stock Options Based
Upon the Treasury Stock
Method - -
2,829,190 2,829,090
Net Income (Loss) $(675,000) $(1,826,000)
Diluted Net Income (Loss)
Per Common Share:
Net Income (Loss) Per Share $(.24) $(.65)
For the Three Months Ended
September 30,
BASIC: 1998 1997
Weighted Average Common Shares
Outstanding 2,829,190 2,829,090
Net Income (Loss) $(163,000) $(570,000)
Basic Net Income (Loss)
Per Common Share:
Net Income (Loss) per share $(.06) $(.20)
DILUTED:
Weighted Average Common
Shares Outstanding 2,829,190 2,829,090
Dilutive Stock Options Based
Upon the Treasury Stock
Method - -
2,829,190 2,829,090
Net Income (Loss) $(163,000) $(570,000)
Diluted Net Income (Loss)
Per Common Share:
Net Income (Loss) Per Share $(.06) $(.20)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,552
<SECURITIES> 1061
<RECEIVABLES> 296
<ALLOWANCES> 15
<INVENTORY> 0
<CURRENT-ASSETS> 3267
<PP&E> 2891
<DEPRECIATION> 2779
<TOTAL-ASSETS> 6525
<CURRENT-LIABILITIES> 4918
<BONDS> 0
0
0
<COMMON> 2357
<OTHER-SE> (2854)
<TOTAL-LIABILITY-AND-EQUITY> 6525
<SALES> 636
<TOTAL-REVENUES> 636
<CGS> 444
<TOTAL-COSTS> 1639
<OTHER-EXPENSES> 16
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4
<INCOME-PRETAX> (1023)
<INCOME-TAX> (348)
<INCOME-CONTINUING> (675)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (675)
<EPS-PRIMARY> (.24)
<EPS-DILUTED> (.24)
</TABLE>
