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, 1999
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, 1999. 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 31 pages
Exhibit index on page 30
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
FORM 10-QSB
FOR THE QUARTERLY PERIOD ENDED September 30, 1999
I N D E X
Page(s)
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets as of September 30,
1999 and December 31, 1998 3 - 4
Consolidated Statements of Operations for the 5
Nine Months Ended September 30, 1999 and 1998
Consolidated Statements of Operations for the 6
Three Months Ended September 30, 1999 and 1998
Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 1999 and 1998 7 - 8
Notes to Consolidated Financial Statements 9 - 13
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 14 - 26
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 27
Item 6. Exhibits and Reports on Form 8-K 28
SIGNATURES 29
EXHIBIT INDEX 30
EXHIBITS 31
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
(In $000's)
<TABLE>
ASSETS
<CAPTION>
September 30, December 31,
1999 1998
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 366 $ 605
Marketable securities 1,284 1,806
Accounts receivable - trade
(net of allowance for doubtful
accounts of $2) 304 225
Notes receivable 113 108
Prepaid expenses and other 322 319
Total current assets 2,389 3,063
PROPERTY, PLANT AND EQUIPMENT
Machinery and equipment 2,901 2,891
Less accumulated depreciation (2,814) (2,794)
Net property, plant and equipment 87 97
OTHER ASSETS
Notes receivable 128 137
Assets held for sale 1,312 1,312
Escrowed funds from sale of
subsidiary 889 859
Other 132 132
Total other assets 2,461 2,440
TOTAL ASSETS $ 4,937 $ 5,600
See Notes to Consolidated Financial Statements
</TABLE>
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Cont'd
CONSOLIDATED BALANCE SHEETS, Cont'd
(In $000's)
<TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
<CAPTION>
September 30, December 31,
1999 1998
(Unaudited)
CURRENT LIABILITIES
<S> <C> <C>
Current portion of long-term debt $ 14 $ 24
Accounts payable 128 289
Accrued income taxes and related
interest 3,349 3,747
Deferred income taxes 4 3
Accrued miscellaneous expenses 169 163
Total current liabilities 3,664 4,226
OTHER LIABILITIES
Long-term debt 4 15
Accrued remediation and closure
costs 2,117 2,110
Total other liabilities 2,121 2,125
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 6,276 6,358
Net unrealized gains on marketable
securities 17 32
Subtotal 10,166 10,263
Treasury stock, at cost -
1,885,750 shares (11,014) (11,014)
Total stockholders' equity
(deficit) (848) (751)
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT) $ 4,937 $ 5,600
See Notes to Consolidated Financial Statements
</TABLE>
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Cont'd
CONSOLIDATED STATEMENTS OF OPERATIONS
(In $000's, except per share data)
(Unaudited)
<TABLE>
For the Nine Months Ended
September 30,
1999 1998
<S> <C> <C>
NET REVENUES $ 112 $ 636
COST OF OPERATIONS
Direct operating costs 96 444
Selling, general and
administrative expenses 1,039 1,195
Total cost of operations 1,135 1,639
INCOME (LOSS) FROM OPERATIONS (1,023) (1,003)
OTHER INCOME (EXPENSE)
Investment income (loss) 119 156
Interest expense (2) (4)
Interest (expense) credit related
to income taxes payable 178 (251)
Gain (loss) from sale of property 6 4
Miscellaneous income (expense) 420 75
Total other income (expense) 721 (20)
INCOME (LOSS) BEFORE INCOME TAXES
(CREDIT) (302) (1,023)
Income taxes (credit) (220) (348)
NET INCOME (LOSS) $ (82) $ (675)
INCOME (LOSS) PER COMMON SHARE:
NET INCOME (LOSS) $(.03) $(.24)
NUMBER OF SHARES USED IN
CALCULATION 2,829,190 2,829,190
See Notes to Consolidated Financial Statements
</TABLE>
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Cont'd
CONSOLIDATED STATEMENTS OF OPERATIONS
(In $000's, except per share data)
(Unaudited)
<TABLE>
For the Three Months Ended
September 30,
1999 1998
<S> <C> <C>
NET REVENUES $ 4 $ 231
COST OF OPERATIONS
Direct operating costs 2 124
Selling, general and
administrative expenses 309 371
Total cost of operations 311 495
INCOME (LOSS) FROM OPERATIONS (307) (264)
OTHER INCOME (EXPENSE)
Investment income (loss) 38 52
Interest expense - (1)
Interest (expense) credit related
to income taxes payable (80) (80)
Gain (loss) from sale of property - 5
Miscellaneous income (expense) 64 40
Total other income (expense) 22 16
INCOME (LOSS) BEFORE INCOME TAXES
(CREDIT) (285) (248)
Income taxes (credit) - (85)
NET INCOME (LOSS) $ (285) $ (163)
INCOME (LOSS) PER COMMON SHARE:
NET INCOME (LOSS) $(.10) $(.06)
NUMBER OF SHARES USED IN
CALCULATION 2,829,190 2,829,190
See Notes to Consolidated Financial Statements
</TABLE>
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Cont'd
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In $000's)
(Unaudited)
<TABLE>
For the Nine Months Ended
September 30,
1999 1998
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS:
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $ 132 $ 480
Cash paid to suppliers and employees (1,282) (1,378)
Interest and dividends received 100 117
Interest paid (3) (4)
Other income received 345 270
Income taxes paid (1) -
Net cash provided by (used in)
operating activities (709) (515)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale and maturity
of marketable securities 1,737 1,520
Purchase of marketable securities (1,230) -
Purchase of property, plant and
equipment (25) (6)
Proceeds from sale of property,
plant and equipment 7 271
Collections of notes receivable 13 8
Net cash provided by (used in)
investing activities 502 1,793
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt (21) (16)
Payment of remediation and closure
costs (11) (21)
Net cash provided by (used in)
financing activities (32) (37)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (239) 1,241
CASH AND CASH EQUIVALENTS AT BEGINNING
OF THE YEAR 605 311
CASH AND CASH EQUIVALENTS AT END
OF THE QUARTER $ 366 $1,552
</TABLE>
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,
1999 1998
<S> <C> <C>
RECONCILIATION OF NET INCOME (LOSS)
TO NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES:
NET INCOME (LOSS) $ (82) $ (675)
ADJUSTMENTS TO RECONCILE NET INCOME
(LOSS) TO NET CASH PROVIDED BY
(USED IN) OPERATING ACTIVITIES:
Depreciation and amortization 31 44
(Gain) loss on sale of property,
plant and equipment (7) (4)
Increase (decrease) in deferred
income taxes - 3
(Increase) decrease in assets:
Accounts and notes receivable,
-net (68) (156)
Prepaid expenses and other - (36)
Write-down of receivable, clay deposit - 50
Escrowed funds from sale of subsidiary (30) (32)
Increase (decrease) in liabilities:
Accounts payable and accrued
expenses (155) 388
Accrued income taxes and related
interest (398) (97)
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES $ (709) $ (515)
See Notes to Consolidated Financial Statements
</TABLE>
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Cont'd
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1999
(Unaudited)
NOTE 1 - FORWARD LOOKING STATEMENTS
Certain statements in this report which are not historical
facts or information are forward-looking statements within the
meaning of 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.
NOTE 2 - BASIS OF PRESENTATION
The accompanying financial statements are presented in
accordance with the requirements of Form 10-QSB and consequently do
not include all of the disclosures normally required by generally
accepted accounting principles or those normally made in the
Company's annual Form 10-KSB filing. Accordingly, the reader of
this Form 10-QSB may wish to refer to the Company's Form 10-KSB for
the year ended December 31, 1998 for further information.
The financial information has been prepared in accordance with
the Company's customary accounting practices except for certain
reclassifications to the 1998 financial statements in order to
conform to the presentation followed in preparing the 1999
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 3 - MARKETABLE SECURITIES
The Company classifies all equity securities and debt
securities 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, 1999, available-for-sale debt securities consisted of
$1,230,000 of U.S. Government Securities with maturities through
March 30, 2000. 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 $55,000 as of September 30, 1999. The aggregate
excess of market value over cost of such securities as of September
30, 1999 of $17,000 is presented as a separate component of
stockholders' equity. The excess of market value over cost
consisted of gross unrealized gains of $40,000 and gross unrealized
losses of $23,000 as of September 30, 1999. 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 and maturity of available-for-sale securities during the
nine months ended September 30, 1999 amounted to $1,737,000.
Dividend and interest income is accrued as earned.
NOTE 4 - ASSETS HELD FOR SALE
Assets held for sale consist primarily of real estate which is
carried at a cost of $1,312,000 as of September 30, 1999. The real
estate included in this category as of September 30, 1999 consists
of approximately 430 acres in Deptford, N.J., including
approximately 100 acres upon which the 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 sale(s) 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 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, 1999, long-term debt consisted of the following
(in $000's):
10.5% mortgage payable in $ 7
installments through April 2000;
secured by land and buildings
Other (vehicle and equipment financing) 11
Total long-term debt 18
Less: current portion (14)
$ 4
NOTE 7 - REMEDIATION AND CLOSURE COSTS
The Company and certain subsidiaries previously participated
in the resource recovery and waste management industries. These
activities included the hauling of waste, waste treatment and the
operation of three landfills. Although the landfills are now
closed, the Company continues to own two landfills and to remediate
one of the owned landfills and one landfill formerly leased, and
has both incurred, and accrued for, substantial costs associated
therewith.
The impact of future events or changes in environmental laws
and regulations, which cannot be predicted at this time, could
result in material increases in remediation and closure costs
related to the Company's past waste related activities, possibly in
excess of the Company's available financial resources. A
significant increase in such costs could have a material adverse
effect on the Company's financial position, results of operations
and net cash flows.
The Company's accruals for closure and remediation activities
equal the present value of its allocable share of the estimated
future costs related to a site less funds held in trust for such
purposes. Such estimates require a number of assumptions, and
therefore may differ from the ultimate outcome. The costs of
litigation associated with a site are expensed as incurred.
As of September 30, 1999, 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 in Deptford, New Jersey 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. Remediation and closure activities continue at
the Kin-Buc Landfill pursuant to the provisions of an Amended
Administrative Order issued by the United States Environmental
Protection Agency (the "EPA") to the Company and other respondents,
including SCA Services, Inc. ("SCA"), an unaffiliated company, in
September 1990 (the "1990 Order"). In November 1992, EPA issued an
Administrative Order to the Company, SCA and other respondents for
the remediation of certain areas neighboring the Kin-Buc Landfill
(the "1992 Order"). Each respondent to these orders is jointly and
severally liable thereunder.
In May 1997, EPA began an investigation of an area in the
vicinity of the Kin-Buc Landfill known as Mound B. In May 1998,
the final plan of this investigation was completed, and 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.
Kin-Buc, Inc. had accrued approximately $10.7 million for its
share of the costs of such remediation and closure. The Company
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.
During July 1999, counsel to the Company was contacted by the
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, officer and principal shareholder of the
Company. The EPA is performing remediation at the site and had
requested information from approximately 100 potentially
responsible parties concerning their involvement with the Tang
site. Transtech had no direct involvement with the EPA since
October 1990 and had not been the recipient of an EPA request for
information. The July 1999 inquiry set forth the 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 for a period of three months. In
November 1999 EPA and the Company agreed to extend the statute an
additional three months. During this period, EPA and the Company
are to continue discussion of any potential claims EPA may be
contemplating against the Company with respect to the site, and
the amount of contribution EPA believes such claims may warrant
toward EPA's estimated $2.4 million of unallocated remediation
costs associated with the site. Pursuant to a 1988 agreement with
Tang, in 1988, 1989 and 1990 Transtech spent approximately $4.3
million for the remediation of the site.
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.
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
The following discussion and analysis should be read in
conjunction with the Company's Consolidated Financial Statements
and related notes, which provide additional information concerning
the Company's financial activities and condition.
Forward-Looking Statements
Certain statements in this report which are not historical
facts or information are forward-looking statements within the
meaning of 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.
Results of Operations
The nine months ended September 30, 1999 compared to the nine
months ended September 30, 1998
Consolidated revenues by business segment for the nine months
ended September 30, 1999 and 1998 were as follows (in $000):
<TABLE>
1999 1998
<S> <C> <C>
Electricity Generation $ 58 $ 206
Environmental Services 635 857
Subtotal 693 1,063
Intercompany (581) (427)
Net $ 112 $ 636
</TABLE>
Revenues from the operation which generates electricity using
methane gas as fuel were $58,000 for the nine months ended
September 30, 1999, a decrease of $148,000 or 72% compared to
revenues of $206,000 reported 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 13 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 2.3 million kwh
during the nine months ended September 30, 1999 compared to 7.0
million kwh sold in the same period of the prior year. The
combined rate received (per Kilowatt and capacity payment)
decreased 7.1% in the current period when compared to the
comparable period last year. The decline in quantity sold is
primarily due to the Company electing not to repair the
diesel/generating units pending the negotiations of an offer to
purchase the electricity generating operations. See the discussion
of "Liquidity and Capital Resources" below for information
regarding the lease of the landfill gas generated at this site and
the offer to purchase the electricity generating operations.
The environmental services segment provides construction,
remedial and maintenance services at landfills, commercial and
industrial sites, and manages methane gas recovery operations. The
environmental services segment reported $635,000 of gross operating
revenues for the nine months ended September 30, 1999 (prior to
elimination of intercompany sales) compared to $857,000 for the
period in 1998, a decrease of 26%. Approximately $581,000 or 91%
of the environmental services segment's revenues for the period,
compared to $427,000 or 50% 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 1999 and 1998 were $54,000 and $430,000, respectively. The
Company is continuing its efforts to expand the customer base of
this segment to entities outside the consolidated group.
Consolidated net revenues for the nine months ended September
30, 1999 were $112,000, a decrease of $524,000 or 82% compared to
the same period of 1998.
Consolidated direct operating costs for the nine months ended
September 30, 1999 were $96,000, a decrease of $348,000 or 78% from
$444,000 reported for the same period in 1998. The costs of the
electricity generating operation decreased for the nine months
ended September 30, 1999 when compared to the same period in 1998
due to a decrease in operating, repair and maintenance costs
incurred for the electric generating equipment. Costs of the
environmental services segment decreased due to the decrease in
sales volume.
Consolidated selling, general and administrative expenses for
the nine months ended September 30, 1999 were $1,039,000, a
decrease of $156,000 or 13% from $1,195,000 for the same period in
1998. The decrease was primarily due to a decrease in personnel
costs and professional fees. 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, 1999 increased to $1,023,000 from a loss of
$1,003,000 for the same period in 1998.
Consolidated investment income decreased by $37,000 to
$119,000 for the nine months ended September 30, 1999 from $156,000
for the comparable period last year.
Consolidated interest expense for the nine months ended
September 30, 1999 of $2,000 was substantially unchanged from the
$4,000 reported for the same period last year.
Interest reported as "Interest (expense) credit related to
income taxes payable" represents the increase or decrease in the
amount of interest accrued on estimated income taxes payable as a
result of the Company's tax litigation referred to below. Such
interest credit for the nine months ended September 30, 1999
equaled $178,000 versus an expense of $251,000 reported for the
comparable period in 1998.
Consolidated miscellaneous income for the nine months ended
September 30, 1999 increased $345,000 to $420,000 when compared to
the $75,000 reported for the same period of 1998. Miscellaneous
income for the period in 1999 includes income of $74,000 in
recognition of a payment due from the lessee of the landfill gas
generated at a landfill owned by the Company. Miscellaneous income
for the period in 1999 also includes income of $250,000 related to
the settlement of claims brought against one of the Company's
excess insurance carriers, and $35,000 received from the estate of
an insolvent excess insurance carrier.
Miscellaneous income for the period in 1999 and 1998 includes
income of $7,500 and $219,000, respectively, in recognition of
royalty payments received from the lessee of certain of the
Company's real property situated beneath the lessee's landfill.
The payments are reported net of a fee payable pursuant to a
consulting agreement executed in 1982.
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.
The consolidated loss before income tax credits was $302,000
for the nine months ended September 30, 1999, compared to a loss of
$1,023,000 for the same period last year.
An income tax credit of $220,000 has been recognized for the
nine months ended September 30, 1999. The income tax credit for
same period of 1998 equalled $348,000.
Consolidated net loss for the nine months ended September 30,
1999 was $82,000 or $.03 per share, compared to net loss of
$675,000 or $.24 per share, for the nine months ended September 30,
1998.
The three months ended September 30, 1999 compared to the
three months ended September 30, 1998
Consolidated revenues by business segment for the three months
ended September 30, 1999 and 1998 were as follows (in $000):
<TABLE>
1999 1998
<S> <C> <C>
Electricity Generation $ 2 $ 72
Environmental Services 234 351
Subtotal 236 423
Intercompany (232) (192)
Net $ 4 $231
</TABLE>
Revenues from the operation which generates electricity using
methane gas as fuel were $2,000 for the three months ended
September 30, 1999, a decrease of $70,000 or 97% compared to the
same period of the prior year. The decline in quantity sold is due
to the Company electing not to repair the four diesel/generating
units pending the negotiations of an offer to purchase the
electricity generating operations. See the discussion of
"Liquidity and Capital Resources" below for information regarding
the lease of the landfill gas generated at this site and the offer
to purchase the electricity generating operations.
The environmental services segment reported $234,000 of gross
operating revenues for the three months ended September 30, 1999
(prior to elimination of intercompany sales) compared to $351,000
for the period in 1998, a decrease of 33%. Approximately $232,000
or 99% of the environmental services segment's revenues for the
period, compared to $192,000 or 55% 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 1999 and 1998 were approximately $2,000 and $159,000,
respectively.
Consolidated net revenues for the three months ended September
30, 1999 were $4,000, a decrease of $227,000 or 98% compared to the
same period of 1998.
Consolidated direct operating costs for the three months ended
September 30, 1999 were $2,000, a decrease of $122,000 or 98% from
$124,000 reported for the same period in 1998. The costs of the
electricity generating operation decreased for the three months
ended September 30, 1999 when compared to the same period in 1998
due to the Company's decision to forgo expenditures on operating,
repair and maintenance costs for the electric generating equipment
pending the results of the negotiations with respect to the sale of
the equipment discussed below. Costs of the environmental services
segment decreased due to the decrease in sales volume.
Consolidated selling, general and administrative expenses for
the three months ended September 30, 1999 were $309,000, a decrease
of $62,000 or 17% from $371,000 for the same period in 1998. The
decrease was primarily due to a decrease in personnel costs and
professional fees. 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 three months
ended September 30, 1999 increased to $307,000 from a loss of
$264,000 for the same period in 1998.
Consolidated investment income decreased by $14,000 to $38,000
for the three months ended September 30, 1999 from $52,000 for the
comparable period last year.
Interest expense reported as "Interest (expense) credit
related to income taxes payable" represents the increase or
decrease in the amount of interest accrued on estimated income
taxes payable as a result of the Company's tax litigation referred
to below. Interest expense of $80,000 was recognized for both the
three months ended September 30, 1999 and for the comparable period
in 1998.
Consolidated miscellaneous income for the three months ended
September 30, 1999 increased $24,000 to $64,000 when compared to
the same period of 1998. Miscellaneous income for the period in
1999 includes income of $35,000 received from the estate of an
insolvent excess insurance carrier.
Consolidated loss before income tax credits was $285,000 for
the three months ended September 30, 1999, compared to a loss of
$248,000 for the same period last year.
An income tax credit of $85,000 was recognized for the three
months ended September 30, 1998. No provision for income taxes is
reported for the period in 1999.
Consolidated net loss for the three months ended September 30,
1999 was $285,000 or $.10 per share, compared to a net loss of
$163,000, or $.06 per share, for the three months ended September
30, 1998.
Liquidity and Capital Resources
General
Net cash used in operating activities for the nine months
ended September 30, 1999 increased to a net use of $709,000 from a
net use of $515,000 when compared to the same period of last year.
Net cash provided by investing activities increased this year to
$1,737,000 from $1,520,000 due to timing of the maturities of
marketable debt securities. The use of cash in financing
activities for the period was $32,000 compared to $37,000 for last
year. Funds held by the Company in the form of cash and cash
equivalents decreased as of September 30, 1999 to $366,000 from
$1,552,000 as of September 30, 1998. The sum of cash, cash
equivalents and marketable securities as of September 30, 1999
decreased to $1,650,000 from $2,613,000 when compared to one year
ago.
Working capital deficit was $1.3 million and $1.2 million,
and the ratio of current assets to current liabilities was 0.7 to
1 as of September 30, 1999 and December 31, 1998.
THE COMPANY FACES SIGNIFICANT SHORT-TERM AND LONG-TERM CASH
REQUIREMENTS FOR (I) FEDERAL AND STATE INCOME TAX OBLIGATIONS
DISCUSSED BELOW AND IN THE NOTES TO THE COMPANY'S CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1998, 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, (II)
FUNDING ITS PROFESSIONAL AND ADMINISTRATIVE COSTS, AND (III)
FUNDING REMEDIATION COSTS ASSOCIATED WITH SITES OF PAST OPERATIONS.
The Company has accrued $3.3 million through September 30,
1999 with respect to the federal and state income tax obligations.
This estimated amount exceeds the Company's currently liquid
assets. 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.
Although the Company continues to pursue the sale of assets
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 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, including its anticipated tax
liabilities. In the event of an unfavorable resolution of the
insurance litigation, or should the proceeds of asset sales be
insufficient to meet the Company's future cash requirements,
including its tax liabilities, then, if other alternatives are
unavailable at that time, the Company will be forced to consider a
plan of liquidation of its remaining assets, whether through
bankruptcy proceedings or otherwise.
Taxes
As discussed in greater detail below, the Company has been
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. The Company has reached agreement
with the Service as to all issues in the Tax Court litigation. The
Company estimates that, taking into account available net operating
losses and tax credits as of September 30, 1999, approximately
$905,000 of federal income tax and $127,000 of state income tax and
$2,317,000 of federal interest (plus additional interest from
September 30, 1999 forward), will be owed when a judgment is
entered at the conclusion of Tax Court litigation. (This does not
include any penalties, as the Service has conceded all of the
penalties that it had asserted in the Tax Court litigation.
However, 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, 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
settlement. These settlements resolved all of the adjustments
asserted in the deficiency notice.
As a result of the settlements, 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 $27.4 million
of taxable income and $2.5 million of penalties.
The Company has net operating losses and tax credits that will
partly offset the tax liability resulting from the settled
adjustments to taxable income. Taking into account such losses and
credits, the estimated federal income tax and interest that is owed
on account of the settlements is approximately $3,222,000, with
interest through September 30, 1999 ($905,000 of taxes and
$2,317,000 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. Payment of
the federal tax liability and the remaining state tax liability
will be due after the conclusion of the Tax Court case. The $3.3
million of taxes and interest through September 30, 1999 that is
estimated to be owed by the Company (plus additional interest
accruing from September 30, 1999 until the obligations are settled)
exceeds the Company's current liquid assets (i.e., cash and
marketable securities). The Company and the Service are currently
discussing the computation of the amount of tax and interest owed
as a result of the settlements.
Remediation and Closure Costs
As of September 30, 1999, 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).
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 (see Note
7 to the Company's Consolidated Financial Statements). 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. 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.
During July 1999, counsel to the Company was contacted by the
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, officer and principal shareholder of the
Company. The EPA is performing remediation at the site and had
requested information from approximately 100 potentially
responsible parties concerning their involvement with the Tang
site. Transtech had no direct involvement with the EPA since
October 1990 and had not been the recipient of an EPA request for
information. The July 1999 inquiry set forth the 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 for a period of three months. In
November 1999 EPA and the Company agreed to extend the statute an
additional three months. During this period, EPA and the Company
are to continue discussions of any potential claims EPA may be
contemplating against the Company with respect to the site, and the
amount of contribution EPA believes such claims may warrant toward
EPA's estimated $2.4 million of unallocated remediation costs
associated with the site. Pursuant to a December 1988 agreement
with Tang, in 1988, 1989 and 1990 Transtech spent approximately
$4.3 million for the remediation of the site.
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 $1,312,000 as of June 30, 1999. The real
estate included in this category consists of approximately 430
acres located in Deptford, N.J. (including approximately 100 acres
upon which the landfill owned and operated by the Company's
subsidiary Kinsley's Landfill, Inc. ("Kinsley's") is situated).
The Company is actively pursuing the disposition of such property.
However, based upon market conditions for real estate of this type
the Company is unable to determine when such sale(s) will
ultimately be consummated.
During the fourth quarter of 1997 the Company charged $33,000
to operations to reduce the carrying value of 2 acres located in
Readington Township, N.J. to $267,000, which represents proceeds
received by the Company from the March 1998 sale of such property.
In 1995, the Company commenced suit against its excess
insurers during the period 1965 through 1986 to obtain a recovery
of past costs and indemnification for future 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 ("First State") 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 cover Transtech, its present subsidiaries and former
subsidiaries, some of which Transtech no longer controls. Certain
companies presently or formerly owned or controlled by Marvin H.
Mahan, which are also covered, assigned their rights as holders and
claimants under these policies to the Company in October 1998.
During June 1999, the Company and First State 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. Settlement discussions continue with the remaining
solvent carriers.
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 cash requirements of the Company discussed
above.
Gas Lease and Electricity Generating Equipment
To increase the Company's liquidity, on June 30, 1998
Kinsley's 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, as amended, requires the
lessee to make an initial payment of $10,000 and additional
quarterly payments of $100,000 for the period beginning January 1,
1999 through December 31, 2007. Such payment is subject to an
upward or downward adjustment depending on the quantities of gas
produced pursuant to an operation and maintenance agreement
discussed below. 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. In December 1998, the Company
filed a required notice with the New Jersey Board of Public
Utilities with respect to the Gas Lease. In June 1999, the
division of New Jersey Department of Environmental Protection
("NJDEP") which monitors the funds held in escrow for the
remediation of the site as well as the Company's compliance with
the site's closure plan, informed the Company that NJDEP was
asserting jurisdiction with respect to the transaction, and in such
capacity, is reviewing the transaction.
In connection with the above agreements, during December 1998,
Kinsley entered into separate agreements with entities affiliated
with the lessee under the Gas Lease for (i) the operation and
maintenance by Kinsley's of the gas collection system for the
benefit of the lessee, (ii) the sale by Kinsley's of its
electricity generating operation (which has been marginally
profitable in recent years) for approximately $490,000, (iii) the
operation and maintenance by Kinsley's of the electricity
generating equipment, (iv) processing of Kinsley's leachate and (v)
the operation and maintenance by Kinsley's of the leachate
processing equipment. The agreements relating to the sale and
operation and maintenance of the electricity generating equipment
are contingent upon, among other things, the buyer obtaining
financing. The agreement regarding the sale of the electricity
generating equipment expired May 28, 1999, in accordance with its
terms. However, the Company and buyer are continuing discussions
regarding a transaction similar to that contemplated by the
agreement and await the conclusion of NJDEP's review of the Gas
Lease. The leachate processing transactions are contingent upon,
among other things, financing and acquisition of the necessary
equipment by the other party to the 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.
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
As previously reported, the Company commenced suit in 1995 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, 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 and the Piscataway, New Jersey site owned by Tang Realty,
Inc. ("Tang"), a corporation controlled by Marvin H. Mahan (a
former director and officer and principal shareholder of the
Company) 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 cover Transtech,
its present subsidiaries and former subsidiaries, some of which
Transtech no longer controls. Certain companies presently or
formerly owned, controlled by or affiliated with Marvin H. Mahan,
which are also covered, assigned their rights as insureds and
claimants under such policies to the Company in October 1998.
During June 1999, the Company and First State 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. Settlement discussions with the remaining solvent
carriers continue.
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, 1998. Reference is
made thereto for a description of such litigation.
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
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 15, 1999 By: /s/ Robert V. Silva
Robert V. Silva, President
and Chief Executive Officer
and
Date: November 15, 1999 By: /s/ Andrew J. Mayer, Jr.
Andrew J. Mayer, Jr.
Vice President-Finance, Chief
Financial Officer and Secretary
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
FORM 10-QSB
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999
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: 1999 1998
<S> <C> <C>
Weighted Average Common Shares
Outstanding 2,829,190 2,829,190
Net Income (Loss) $ (82,000) $ (675,000)
Basic Net Income (Loss)
Per Common Share:
Net Income (Loss) per share $(.03) $(.24)
DILUTED:
Weighted Average Common
Shares Outstanding 2,829,190 2,829,190
Dilutive Stock Options Based
Upon the Treasury Stock
Method - -
2,829,190 2,829,190
Net Income (Loss) $ (82,000) $ (675,000)
Diluted Net Income (Loss)
Per Common Share:
Net Income (Loss) Per Share $(.03) $(.24)
For the Three Months Ended
September 30,
BASIC: 1999 1998
Weighted Average Common Shares
Outstanding 2,829,190 2,829,190
Net Income (Loss) $ (285,000) $ (163,000)
Basic Net Income (Loss)
Per Common Share:
Net Income (Loss) per share $(.10) $(.06)
DILUTED:
Weighted Average Common
Shares Outstanding 2,829,190 2,829,190
Dilutive Stock Options Based
Upon the Treasury Stock
Method - -
2,829,190 2,829,190
Net Income (Loss) $ (285,000) $ (163,000)
Diluted Net Income (Loss)
Per Common Share:
Net Income (Loss) Per Share $(.10) $(.06)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 366
<SECURITIES> 1284
<RECEIVABLES> 306
<ALLOWANCES> 2
<INVENTORY> 0
<CURRENT-ASSETS> 2389
<PP&E> 2901
<DEPRECIATION> 2814
<TOTAL-ASSETS> 4937
<CURRENT-LIABILITIES> 3664
<BONDS> 0
0
0
<COMMON> 2357
<OTHER-SE> (3205)
<TOTAL-LIABILITY-AND-EQUITY> 4937
<SALES> 112
<TOTAL-REVENUES> 112
<CGS> 96
<TOTAL-COSTS> 1135
<OTHER-EXPENSES> (723)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2
<INCOME-PRETAX> (302)
<INCOME-TAX> (220)
<INCOME-CONTINUING> (82)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (82)
<EPS-BASIC> (.03)
<EPS-DILUTED> (.03)
</TABLE>
