U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2007
Check whether the issuer (l) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES X NO
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes___ No_X_
At March 24, 2008 the aggregate market value of the voting stock of the
registrant held by non-affiliates was approximately $270,000.
At March 24, 2008 the issuer had outstanding 2,979,190 shares of Common Stock,
$.50 par value. In addition, at such date, the registrant held 1,885,750 shares
of Common Stock, $.50 par value, in treasury.
Annual report to security holders for the fiscal year ended December 31, 2007
is incorporated by reference into Part II of this Form 10-KSB with respect to
Items 5, 6 and 7 of such Part II.
Part I, Item 1. Description of Business.
General
Transtech Industries, Inc. ("Transtech") was incorporated under the laws
of the State of Delaware in 1965. Transtech, through its subsidiaries
(Transtech and its subsidiaries collectively referred to as the "Company"),
supervises and performs landfill monitoring, closure and post-closure
procedures, manages methane gas recovery operations and generates electric
power utilizing methane gas (see "Continuing Operations" below).
The Company consists of the parent company, Transtech, two operating
subsidiaries and 19 inactive subsidiaries. Transtech is a public holding
company which manages its investments and subsidiaries. The operations of
the subsidiaries include an electric power generation segment and an
environmental services segment.
At December 31, 2007, the Company employed 12 persons on a full-time
basis.
The Company and certain subsidiaries were previously involved in the
resource recovery and waste management industries. These activities ended
in 1987 and included the operation of three landfills and a solvents
recovery facility. Although these sites are now closed, the Company
continues to own and/or remediate them and has both incurred and accrued for
the substantial costs associated with the remediation and post-closure
maintenance of certain sites (see "Prior Operations" below and Part I, Item
3, Legal Proceedings). The Company has also incurred significant legal and
administrative expenses with respect to litigation, and legal and
administrative proceedings related to its past activities in the resource
recovery and waste management industries as the liability for remediation of
sites that the Company previously operated or was named as a potentially
responsible party were being sorted-out among all potentially responsible
parties through extensive and complex litigation that involved a developing
body of environmental law. Proceedings continue with respect to certain
sites which are discussed below. The Company had also incurred significant
costs in support of its litigation against certain excess insurance carriers
for reimbursement of past remediation expenditures, and litigation before
the U.S. Tax Court.
In order to pay its mounting legal costs and remediation obligations,
the Company divested a number of its more significant businesses during the
period of 1986 through 1996. During the period of 1992 through 2002, the
Company consummated settlements of its claims against certain insurance
carriers and excess insurance carriers for a total of approximately $29.4
million, and received a total of $5.1 million during 2005 and 2006 from
claims filed against the estates of certain insolvent excess insurers. The
Company has also sold portions of its dormant real estate during 1992, 1997
and 1998 totaling approximately 678 acres for approximately $2.0 million,
and in 2006, completed the sale of approximately 60 acres of real property
for approximately $2.2 million(see Part I, Item 2).
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, that 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.
In addition, at December 31, 2007, the Company owes the Internal Revenue
Service (the "Service") approximately $933,000 as a result of the settlement
of its issues before the US Tax Court regarding the Company's tax liability
for the years 1980 through 1991.
The Company believes it has sufficient liquid assets to sustain
operations at least one year, and continues to pursue the sale of certain
real property. However, no assurance can be given that the timing and
amount of the proceeds from such sales will be sufficient to meet the longer
term cash requirements of the Company as they come due. In addition, the
Company cannot ascertain whether its remaining operations and funding
sources will be adequate to satisfy its future cash requirements.
Continuing Operations
Environmental Services. The environmental services segment primarily
provides landfill closure and post-closure services, and installs and
manages methane gas operations. The segment has also provided construction
and remedial services at commercial and industrial sites. The segment's
gross-operating revenue for the years ended December 31, 2007 and 2006 of
$933,000 and $1,196,000, respectively, represented approximately 64% and 77%
of the Company's consolidated gross-operating revenues for 2007 and 2006,
respectively. Substantially all of the environmental services segment's
gross revenues for 2007 and 2006 were for services to other members of the
consolidated group, and therefore eliminated in consolidation.
The Company's environmental services segment performs post-closure
activities on sites previously operated by the Company's subsidiaries.
Work performed on a landfill owned by the Company, the Kinsley's Landfill,
is submitted for reimbursement to a restricted escrow account established
to finance the closure activities at the site (the "Kinsley's Escrow").
The Company billed the Kinsley's Escrow approximately $911,000 and $812,000
for post-closure work performed during the years ended December 31, 2007
and 2006, respectively. All reimbursements from the Kinsley's Escrow must
be approved by the New Jersey Department of Environmental Protection
("NJDEP"). Such amounts are eliminated in the calculation of the Company's
net operating revenue. The Company is also re-grading areas of the
Kinsley's Landfill in accordance with a plan approved by the NJDEP. The
re-grading plan calls for the use of both recycled and non-recycled
materials to fill and re-contour the areas of the landfill containing
depressions. The Company receives a fee to accept certain of the recycled
materials. The costs incurred for re-grading activities shall be paid from
such fees. Costs incurred for re-grading activities in excess of such
fees, if any, will be submitted to NJDEP for reimbursement from the
Kinsley's Escrow. The Company intends to utilize recycled materials to the
fullest extent possible in order to minimize the amount of re-grading costs
paid from the Kinsley's Escrow, if any. The Company competes with certain
landfills and development projects for the revenue producing materials on
the basis of the fee imposed for accepting the materials and transportation
cost, and must obtain NJDEP approval prior to utilizing material from a new
source unless such material has been previously approved for such purposes.
The gross revenue reported for the environmental services segment for the
periods in 2007 and 2006 includes $12,000 and $370,000, respectively, from
such fees. The decline in the revenue associated with the recycled
material is due to competition for such materials from a nearby re-
development project and delays in the receipt of approvals of materials
from the NJDEP. During July, 2007 the Company received notice from the
NJDEP that it has modified its approval of the re-grading plan. Such
competition and modifications may continue to negatively impact the
quantity of the fee producing materials the Company may accept for the re-
grading project and increase the cost of utilizing such materials. The
Company has challenged the NJDEP's modification to the re-grading plan, and
has requested to present its objections before an administrative hearing.
Billings to the Kinsley's Escrow and for services provided to members of
the consolidated group, and the fees received in conjunction with the re-
grading project, are eliminated in the calculation of net operating
revenue.
The market for services provided by the environmental services segment
is limited to the landfills and sites requiring remediation in its
geographical area. The environmental services segment competes on the basis
of price, experience and financial viability with numerous firms typically
having operations involved in other aspects of the light and heavy
construction industries.
The Company is continuing its efforts to expand the customer base of
the environmental services segment to additional entities beyond the
consolidated group. There are no assurances such efforts will result in
work for the Company.
Electricity Generation. Revenues from the operation which generates
electricity utilizing methane gas as fuel were approximately $537,000 and
$364,000 for the years ended December 31, 2007 and 2006, respectively. Such
revenues represent 36% and 23% of consolidated gross operating revenues for
2007 and 2006, respectively, and 100% of consolidated net revenues for both
2007 and 2006. Methane gas is a component of the landfill gas generated by
the Kinsley's Landfill located in Deptford, New Jersey.
The electricity generating facility consists of four trailer mounted
diesel/generating units ("Gen-set(s)") each capable of generating
approximately 11,000 kilowatt hours ("kWh") per day when operating at 85%
capacity. Three of the four Gen-sets were in operation during 2007 while
two of the four Gen-sets were in operation during 2006. Repairs to the
fourth gen-set have been deferred. Electricity generated is sold pursuant
to a contract with a local utility and the contract is currently renewed
annually. Revenues are a function of the number of kWh sold, the rate
received per kWh and capacity payments. The Company sold 7.5 million kWh
during the year ended December 31, 2007 compared to 6.5 million kWh sold in
the prior year. The amount of electricity generated by the electricity
generating facility is limited by a number of factors, including, but not
limited to, the volume and quality of landfill gas generated by the
Kinsley's Landfill, the number and capacity of Gen-sets operating, air
permit limitations and the ability of the local utility to accept the
electricity generated.
The kWh produced during the second quarter in 2007 was adversely
impacted by a failure in the operation's switch gear. The facility did not
generate power for approximately 42 days as temporary equipment was located
and installed. Replacement equipment was installed during the fourth
quarter of 2007. During January 2008, the Company received $62,000 for the
reimbursement for the cost of the replacement equipment from its insurance
carrier as well as $50,000 toward revenue lost during the period power was
not generated. The average combined rate (per kWh and capacity payment)
received for the year ended December 31, 2007 and 2006 was $.071 and $.056,
respectively. Generally speaking, the rate received by the Company
reflects the market price of fossil fuels, and is typically higher in
warmer months. Engineering studies indicate the quantity of gas generated
by the landfill is declining but project sufficient landfill gas to
continue the operation of three of the existing Gen-sets through 2011 and
two of the existing Gen-sets for the period of 2012 through 2017. Elements
of the landfill gas are more corrosive to the equipment than traditional
fuels, resulting in more off-line hours dedicated to repair and maintenance
than with equipment utilizing traditional fuels.
Other Businesses. The other subsidiaries of the Company are inactive
and hold assets consisting of cash and marketable securities, real property,
inter-company receivables and contract rights.
Prior Operations
Landfills. Three solid waste landfills were previously operated by
three wholly-owned subsidiaries of the Company either solely by the
subsidiary or in partnership with a third-party. In February 1987, the
landfill owned and operated by Kinsley's Landfill, Inc. ("Kinsley's")
reached permitted capacity and was closed. In 1976, the landfill owned and
operated by Kin-Buc, Inc. ("Kin-Buc") ceased accepting waste and, in 1977,
the landfill operated by Mac Sanitary Land Fill, Inc. ("Mac") was closed.
Certain federal and state environmental laws require two subsidiaries' to
maintain and monitor the post-closure activities of the landfills they
operated. Kinsley's has future obligations for the cost of post-closure
monitoring and maintenance of the landfill it owns and operated (the
"Kinsley's Landfill"), as does Mac for the landfill it operated on real
property leased from others (the "Mac Landfill"). Post-closure monitoring
and maintenance of the landfill formerly operated by Kin-Buc is performed
by a third-party and is discussed below. Post-closure activities involve
the final cover maintenance, methane gas control, leachate management,
groundwater monitoring, surface water monitoring and control, and other
operational and maintenance activities that occur after the site ceases to
accept waste. The post-closure period generally runs for up to 30 years
after final site closure for municipal solid waste landfills. Obligations
associated with monitoring and controlling methane gas migration and
emissions are set forth in applicable landfill permits and these
requirements are based upon the provisions of the Clean Air Act of 1970, as
amended. The Company's personnel perform the majority of the services
required for its post-closure obligations.
The Company has accrued post-closure costs for Kinsley's Landfill and
Mac Landfill. Such accruals equal the present value of the estimated future
post-closure costs related to a site determined in accordance with Statement
of Financial Accounting Standards No. 143, "Accounting for Asset Retirement
Obligations" ("SFAS 143"). Pursuant to SFAS 143 estimates of costs to
discharge asset retirement obligations are developed in today's dollars.
The estimated costs are inflated to the expected time of payment and then
discounted back to present value. The Company's estimate of post-closure
costs in current dollars were inflated to the expected time of payment
using an inflation rate of 2.5%, and the inflated costs were discounted to
present value using a credit-adjusted, risk-free discount rate of 4.5%.
Such estimates require a number of assumptions, and therefore may differ
from the ultimate outcome. Litigation and administrative costs associated
with a site are expensed as incurred.
Funds held in a restricted escrow account are dedicated to post-closure
activities of Kinsley's Landfill as discussed previously. Post-closure
costs of the Mac Landfill are funded from the Company's operating cash flow
and totaled $10,000 in 2007. The post-closure costs of the Kin-Buc landfill
are discussed below.
At December 31, 2007, the Company has accrued approximately $8.8 million
for the estimated post-closure costs of the Kinsley's Landfill and Mac
Landfill. Approximately $7.4 million was held in an escrow maintained by
trustees for post-closure activities at Kinsley's Landfill as of December
31, 2007.
The impact of future events or changes in environmental laws and
regulations, which cannot be predicted at this time, could result in
material changes in remediation and closure costs related to the Company's
past waste handling activities, possibly in excess of the Company's
available financial resources.
Kinsley's. Kinsley's Landfill, located in Deptford Township, New
Jersey, ceased accepting solid waste on February 6, 1987 and commenced
closure of that facility at that time. The Company's Environmental Services
Segment currently performs the post-closure maintenance required at the
site. At December 31, 2007, Kinsley's has accrued $8,780,000 for post-
closure care of this facility, of which $7,373,000 is held in the escrow
account dedicated to fund Kinsley's post-closure costs. The accrual as of
December 31, 2007 is based upon estimated maintenance costs of the site's
containment systems through the year 2017. The Company billed such escrow
approximately $911,000 and $812,000 in 2007 and 2006, respectively, for
post-closure activities conducted at the site.
Mac. Mac Landfill, also located in Deptford Township, New Jersey,
ceased operations in 1977 and the closure of this facility is completed.
The Company's Environmental Services Segment currently performs the post-
closure maintenance required at the site as well. The costs of post-closure
maintenance and monitoring of the facility are funded by the Company and
were approximately $10,000 and $13,000 for the years ended December 31, 2007
and 2006, respectively. At December 31, 2007, the Company has an accrual of
$17,000 for the costs of continuing post-closure care and monitoring at the
facility. The accrual as of December 31, 2007 is based upon the present
value of the estimated maintenance costs of the site's containment systems
through the year 2008.
Kin-Buc. The landfill owned and operated by Kin-Buc (the "Kin-Buc
Landfill"), located in Edison, New Jersey, was placed on the National
Priorities List in 1983. The Kin-Buc Landfill was operated by Kin-Buc
through August 1975 on property both owned and leased by Kin-Buc. From
September 1975 until the landfill ceased operations in November 1977, the
landfill was managed by Earthline Company ("Earthline"), a partnership
formed by Wastequid, Inc. ("Wastequid"), then a wholly-owned subsidiary of
the Company, and Chemical Waste Management of New Jersey, Inc. ("CWMNJ"), a
wholly-owned subsidiary of SCA Services, Inc. ("SCA") and an affiliate of
Waste Management, Inc. ("WMI"). Remediation of the Kin-Buc Landfill and
certain neighboring areas was performed pursuant to Administrative Orders
(the "Orders") issued by the United States Environmental Protection Agency
("EPA") in September 1990 and November 1992 to 12 respondents: the Company,
Kin-Buc, Earthline, Wastequid, CWMNJ, SCA, Chemical Waste Management, Inc.
(an affiliate of WMI), Filcrest Realty, Inc. (a wholly-owned subsidiary of
the Company) ("Filcrest"), Marvin H. Mahan (a former director, officer and
former principal shareholder of the Company), Inmar Associates, Inc. (a
company owned and controlled by Marvin H. Mahan)("Inmar"), Robert Meagher (a
former director and officer of the Company and Inmar) and Anthony Gaess (a
former director and officer of SCA) ("Gaess").
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 certain future
obligation with respect to the site (see Part I, Item 3, Legal Proceedings
for description of the 1997 Settlement and recent litigation regarding this
site).
In conjunction with the remediation, 26 acres of undeveloped land
neighboring the site and owned by a wholly-owned subsidiary of the Company
were utilized for the construction of the containment system, treatment
plant and related facilities. Maintenance of remedial systems installed at
the site and operation of a fluid treatment plant that was constructed to
treat fluids at the site are required for a 30-year period beginning in
1995. Operation of the treatment plant and maintenance of the facilities is
being conducted by an affiliate of SCA. The total cost of the construction,
operations and maintenance of remedial systems over this period plus the
cost of past remedial activities, was estimated at the time of the December
1997 settlement to be in the range of $80 million to $100 million.
Other areas within the vicinity of the site also may become the subject
of future studies due to the historic use of the area for waste disposal
operations.
The Company had spent in excess of $19.5 million on the remediation of
the Kin-Buc Landfill and on correlative actions as a result of the
remediation effort. The construction at Kin-Buc Landfill since July 1994
has been financed in part with funds provided by SCA and in part with funds
provided from negotiated settlements with certain parties to a suit that the
Company initiated in June 1990 in the United States District Court for the
District of New Jersey against approximately 450 generators and transporters
of waste disposed of at the site for the purpose of obtaining contribution
toward the cost of remediation (the "1990 Action"). The Company's cause of
action against these parties arises under certain provisions of the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended ("CERCLA"), which imposes joint and several liability for the
remediation of certain sites upon persons responsible for the generation,
transportation and disposal of wastes at such sites.
Waste Handling Operations. The Company participated in the waste
treatment and handling industries during the 1960s and 1970s, and has been
named as a potentially responsible party ("PRP") at sites requiring
remediation.
The Company has been named a PRP at the following sites named to the
National Priorities List: the Scientific Chemical Processing Superfund
Site, the Chemsol Superfund Site and the Berry's Creek Study Area. A
discussion of these three sites follows. In addition, during the period of
2004 through 2006 the Company has been named a de minimis PRP of the
Spectron Superfund Site located in Elkton, Maryland, and Ward Transformer
Superfund Site located in Raleigh, North Carolina. The Company charged
$84,000 to earnings in 2004 in recognition of a settlement of claims
regarding the Spectron Superfund Site. Research to determine the extent of
the Company's involvement with respect to the Ward Transformer site
continues, however the Company believes its involvement will be determined
to be de minimis.
Scientific Chemical Processing ("SCP") Superfund Site. The site, also
referred herein as the Carlstadt Site, includes the 5.9 acre property
located at 216 Paterson Plank Road, in the Borough of Carlstadt, Bergen
County New Jersey. Throughout the late 1960s and 1970s Inmar Associates,
Inc. or its predecessor corporations held title to some or all of the SCP
site. The Company had operated a solvents recovery facility at the site, and
ceased operations there in 1970.
On September 1, 1983, the SCP site was listed on the National Priorities
List. On May 17, 1985, EPA issued notice letters to approximately 140
Potentially Responsible Parties ("PRPs") offering them the opportunity to
undertake a Remedial Investigation/Feasibility Study ("RI/FS") at the SCP
site. On September 30, 1985, EPA and a group of 108 PRPs entered into an
Administrative Order on Consent (Index No. II-CERCLA-50114) for the
performance of the RI/FS at the SCP site under EPA's oversight. On October
23, 1985, a group of 31 PRPs were issued a Unilateral Order (Index No. II-
CERCLA-60102) which mandated that they fully participate in the efforts of,
and cooperate with, those parties who entered the Administrative Order on
Consent with EPA for performance of the RI/FS.
On September 14, 1990, EPA issued a Record of Decision selecting an
interim remedy for the first operable unit ("OU1") of the remedy at the SCP
site. OU1 included installation of a slurry wall, installation of a shallow
groundwater extraction system, off-site disposal of the collected
groundwater, and operation and maintenance of the interim remedy. On
September 28, 1990, EPA issued a Unilateral Order (Index No. II-CERCLA-
00116) to 43 respondents, including the Company, requiring them to perform
the OU1 remedy. The construction of the OU1 remedy was completed in June
1992.
On August 12, 2002, EPA issued a Record of Decision selecting the remedy
for the second operable unit ("OU2") at the SCP site. OU2 involves the
remediation of a sludge area of approximately 4,000 square feet at the SCP
site and the capping of the entire area circumscribed by the existing slurry
wall at the SCP site. During September and November 2002, EPA notified a
group of 81 parties, including the Company, of their potential
responsibility regarding the implementation of OU2 and the reimbursement of
EPA for its alleged costs. See Part I, Item 3. - Legal Proceedings for
further discussion of matters regarding the Carlstadt site.
Chemsol Superfund Site. Approximately 100 PRPs have been conducting
remediation of this approximately 40 acre site, also referred herein as the
Tang Site, located in Piscataway, New Jersey and owned by Tang Realty, Inc.
("Tang"), a company owned and controlled by Marvin H. Mahan (a former
director and officer, and former principal shareholder of the Company).
Tang and the Company entered into a settlement agreement (the "Tang
Agreement") in 1988 regarding the costs of remediation of the Chemsol Site
pursuant to which the Company assumed all future remediation costs in
connection with the Chemsol Site. In October 1990, the Company rescinded
the Tang Agreement based on a reassessment of its involvement at the site.
As of the date of the rescission, the Company had paid approximately
$4,300,000 to Tang in reimbursement for damages and actual remediation costs
incurred. On November 20, 2001 EPA filed suit against the Company and
others seeking reimbursement for $2,900,000 of unallocated remediation
costs. During April 2004 a consent decree settling the suit was approved by
the Court. (See Part I, Item 3. - Legal Proceedings for further discussion
of this matter.
Berry's Creek Study Area. The Company was one of 158 recipients of a
Notice of Potential Liability and Request to Perform Remedial
Investigation/Feasibility Study (the "Notice"), dated March 9, 2006, and
issued by EPA regarding the contamination of the Berry's Creek Study Area
(the "Creek Area") located in Bergen County, N.J, which is considered a
phase of the Ventron/Velsicol Superfund Site remediation. A tributary
adjacent to the SCP Site in Carlstadt, N.J. flows into Berry's Creek. The
Creek Area includes the approximately seven miles long water body known as
Berry's Creek, a canal, all tributaries to Berry's Creek and related
wetlands. Tidal areas of the river into which Berry's Creek empties is
also subject of the Notice. Each recipient of the Notice is a potentially
responsible party under CERLA, and may be held liable for the cleanup of
the Creek Area and costs EPA has incurred with regard to the Creek Area.
Since the investigation and feasibility study regarding the scope of the
remediation of the Creek Area is ongoing, and no discovery has taken place
concerning allegations against the Company, it is not possible to estimate
the Company's ultimate liability with respect to the Creek Area. See Part
I, Item 3. - Legal Proceedings for further discussion of matters regarding
Berry's Creek.
Part I, Item 2. Description of Property.
1. A subsidiary of the Company, Filcrest Realty, Inc., owns parcels of
land totaling approximately 53 acres in Edison Township, Middlesex County,
New Jersey, which are currently un-improved vacant land. This property is
located in the vicinity of the Kin-Buc, Inc. property (see Paragraph 5 below
and Part I, Item 1 Prior Operations). Approximately 74 acres of Filcrest's
property was conveyed to a third party as of December 30, 2004 in
conjunction with the settlement of claims brought by EPA (see Part I, Item
3. Legal Proceedings - The Kin-Buc Landfill). Approximately 17 acres of
Filcrest's remaining property has been dedicated to the remediation of areas
neighboring the Kin-Buc, Inc. property. Approximately 37 acres of
Filcrest's remaining property are leased to an unrelated party pursuant to a
99 year lease executed in 1981. Such lessee operated a landfill on this
property through 1987. Edison Township is seeking an easement on and over
certain parcels of this property, which is discussed below.
2. One of the Company's subsidiaries, Kinsley's Landfill, Inc., owns
approximately 263 acres in Deptford Township, Gloucester County, New Jersey.
The subsidiary operated a landfill on approximately 110 acres of this site
through February 1987. This landfill is now undergoing post-closure
maintenance procedures. This property is included in an area designated as
the Five Points Redevelopment Area which is discussed below. Kinsley's
Landfill, Inc. sold approximately 57 acres during October 2006 in a
transaction discussed below.
3. Another subsidiary Birchcrest, Inc. owns approximately 105 acres in
Deptford Township, Gloucester County, New Jersey. This property is included
in an area designated as the Five Points Redevelopment Area which is
discussed below. This entity and Transtech sold a total of approximately 3
acres during October 2006 in a transaction discussed below.
4. Another subsidiary of the Company, Mac Sanitary Land Fill, Inc.,
leased approximately 88 acres in Deptford Township, Gloucester County, New
Jersey for use as a landfill site until February 1977. At that time, the
lease was terminated in accordance with provisions of the lease which
permitted termination when and as the landfill reached the maximum height
allowed under New Jersey law. Mac currently conducts post-closure
maintenance procedures at the site.
5. The approximately 27 acre site owned by Kin-Buc, Inc., another
subsidiary of the Company, in Edison Township, Middlesex County, New Jersey,
was conveyed to a third party as of December 30, 2004 in conjunction with
the settlement of claims brought by EPA (see Part I, Item 3. Legal
Proceedings - The Kin-Buc Landfill). Kin-Buc, Inc. had operated a landfill
on the site. At present, post-closure maintenance procedures are conducted
at the site by SCA (see Part I, Item 1. Prior Operations).
6. The Company leases 2,499 square feet for use as its principal
executive offices in Piscataway, New Jersey pursuant to a lease initiated in
February 1992. The lease was extended by amendment dated as of January 31,
2005. Monthly rent and utility reimbursement equals: $3,621 February 1,
2007 through January 31, 2009; $3,724 February 1, 2009 through the lease
expiration on March 31, 2010. The lease payment is subject to adjustment
increases in specified costs borne by the landlord. The Company may
terminate the lease subsequent to February 27, 2008, provided the Company,
among other requirements, gives 180 days notice and reimburses the landlord
for un-amortized leasehold improvement costs and brokerage fees.
7. In December 2004 the Company entered into a one-year lease,
renewable annually, for a 120 sq. ft. office in Sarasota, Florida. The
monthly rent and related charges equal approximately $1,200 and $1,300 per
month for 2006 and 2007, respectively.
Edison Township Property
The Company's wholly owned subsidiary, Filcrest Realty, Inc. owns
approximately 53 acres of undeveloped property in Edison Township, N.J.
Edison Township has requested that Filcrest Realty, Inc. grant it an
easement on a portion of this property to install a shoreline walkway on
certain lots situated along the Raritan River. The Company has denied the
Township's request believing the structure and location proposed by the
Township will adversely impact the value of that tract which totals
approximately 15 acres. This property was included in the area remediated
pursuant to Administrative Orders issued by the EPA (see Part I, Item 3.
Legal Proceedings, The Kin-Buc Landfill). The Company has offered to sell
the 15 acres to the Township. The Township has conveyed an appraisal
setting the value of the easement at $15,000. The Company regards this
figure as too low and will obtain its own appraisal. The Township of Edison
may commence condemnation proceeding on the 0.48 acres for which the
easement is sought.
Five Points Redevelopment Area
The Company owns approximately 364 contiguous acres in the Township of
Deptford, N.J. (the "Township"). Approximately 110 of the 364 acres are
occupied by the closed Kinsley's Landfill, which is owned by the Company's
wholly owned subsidiary, Kinsley's Landfill, Inc. On December 10, 2007 the
Township's Mayor and Town Council approved a resolution designating an
area, including approximately 342 acres of the Company's property, as an
area in need of redevelopment in accordance with New Jersey Statute
40A:12A-5. This action follows the Township's Planning Board's August 8,
2007 approval of the study prepared by the Township's planner entitled
"Five Points Study Area, Preliminary Investigation: Determination of an
Area in Need of Redevelopment" (the "Five Points Study"). The Five Points
Study concluded that the subject area (the "Five Points Study Area") should
be designated a redevelopment area pursuant to the New Jersey Local Housing
and Redevelopment Law. During September 2007, two subsidiaries of
Transtech commenced litigation against the Planning Board of the Township of
Deptford. During December 2007, the complaint was amended to include The
Township of Deptford, Benderson Properties, Inc. and certain of its
affiliates as defendants. The suit seeks, among other remedies, to reverse
and set aside the Township's Planning Board approval of the 2007 study
prepared by the Township's planner. See Part I, Item 3. Legal Proceedings,
Five Points Redevelopment Zone, for a discussion of this matter.
Sale of Certain Property Located in Deptford, NJ.
On October 19, 2006, Transtech Industries, Inc. ("Transtech"), and its
wholly owned subsidiaries Birchcrest, Inc. ("Birchcrest") and Kinsley's
Landfill, Inc. ("Kinsley's") (collectively referred herein as the
"Company"), completed the sale of real property and buildings located in
Deptford, N.J. pursuant to a contract with BWF Development, Inc. ("BWF").
The real estate sold consists of approximately 60 acres of land (45 acres
usable land and 15 acres of wetlands), upon which two metal buildings and
two private residences are situated. Kinsley's and Birchcrest continue to
own approximately 364 contiguous acres adjacent to the property sold, of
which approximately 110 acres is occupied by the closed Kinsley's Landfill.
The Company initially agreed to sell property to BWF pursuant to the
Agreement of Purchase and Sale dated May 17, 2001. The May 17, 2001
agreement was amended as of December 20, 2002 and on April 20, 2006 (the
May 17, 2001 agreement as amended is referred herein as the "Agreement").
BWF assigned its rights and obligations under the Agreement on October 19,
2006 to a group consisting of five parties; RB-3 Associates, Benderson
Properties, Inc., the Randall Benderson 1993-1 Trust, Feuerstein
Associates, LLC and Wainco Properties, LLC (the five parties collectively
referred herein as "Buyer").
The gross sales price for the land and buildings was $2,244,500,
consisting of (a) a base price of $2,153,000, plus (b) a portion, $90,000,
of the monthly payments paid by BWF prior to closing in accordance with the
Agreement, plus (c) $1,500 representing the portion of the monthly payment
due from BWF for October 2006. The total of the monthly payments,
$216,000, was applied toward the gross sales price, and the balance due of
$2,028,500 was paid at closing. The monthly payments were treated as un-
earned income for financial presentation purposes, and reported as an
accrued miscellaneous liability. The Company recognized a gain from the
sale of $1,852,000, net of the book value of the assets sold and
transaction costs, in its consolidated Statement of Operations for the
year-ended December 31, 2006.
Kinsley's and another Transtech subsidiary utilized one of the two
metal buildings included in the sale to store their machinery and
equipment. On October 19, 2006, Kinsley's and Buyer entered into a Use and
Occupancy Agreement that permits Kinsley's to utilize the building and an
access-way from closing through June 2007, subsequently amended to October
31, 2007, during which time Kinsley's constructed a replacement building.
Kinsley's paid rent at the rate of $2,000 per month for use of the building
for the period of January 1, 2007 through October 31, 2007. No rent was
payable for the period from closing to December 31, 2006. The Company
provided the Buyer a security deposit of $100,000 to assure Kinsley's
performance under the Use and Occupancy Agreement, to fund the remediation
of any contamination found of the property sold that is determined to have
occurred during the period of April 2006 to the closing, and the release of
a $140,000 claim against the property sold related to a previously retired
mortgage. This mortgage claim was cancelled via court order during January
2008.
Kinsley's and Birchcrest no longer receive combined income of
approximately $4,665 per month from the rental of the second metal building
and one residence situated on the property sold. The second residence was
unoccupied. Kinsley's also received rental income from leasing a portion of
its property to a local radio station pursuant to a lease dated March 1,
1995, as amended (the "Tower Lease"). The radio station operates four
transmission antennas on the leased property. Three of the towers are
situated on property sold to the Buyer and one tower is situated on property
retained by the Kinsley's. On October 19, 2006 Kinsley's assigned the Tower
Lease to the Buyer, and entered into a lease with the Buyer for the portion
of Kinsley's property upon which the one tower is situated. Rent payable to
Kinsley's from the Buyer will equal 20% of future Tower Lease rent payments
and 35% of the real estate tax reimbursement payable under the Tower Lease.
Rent paid to Kinsley's from the Buyer for Tower Lease rent payments and real
estate tax reimbursement was $6,000 for the year ended December 31, 2007.
Kinsley's lease with the Buyer runs contemporaneously with the Tower Lease,
which expires February 2010 and is renewable in five year increments through
February 2030. No additional consideration was received by the Company for
either the foregone rental income or the assignment of the Tower Lease.
Birchcrest, Kinsley's and the Buyer also entered into two agreements on
October 19, 2006 which grants perpetual easement rights with respect to
portions of the other party's property. Specifically, Birchcrest and
Kinsley's granted the Buyer easement rights for the placement and
maintenance of signage along the boundary of certain lots retained by them.
The Buyer granted Kinsley's easement rights that address drainage of storm-
water from Kinsley's property onto a portion of the wetlands sold to the
Buyer. Kinsley's agreed to perform maintenance on the area subject to such
easement. No additional consideration was exchanged among the parties for
the granting of the easements.
The Company is pursuing the disposition of its remaining property
through the sale of individual parcels and/or groups of parcels. The
Company is unable to determine when sale(s) of the remaining parcels will
ultimately be consummated and proceeds received given their location,
access issues and the location of wetlands on certain parcels.
Part I, Item 3. Legal Proceedings.
The Kin-Buc Landfill
The Kin-Buc Landfill was owned and operated, both solely for a time and
then with partners, by Transtech's wholly-owned subsidiary, Kin-Buc, Inc.
("Kin-Buc"). The Kin-Buc Landfill and certain neighboring property,
including parcels owned by Transtech's wholly-owned subsidiary Filcrest
Realty, Inc. ("Filcrest") and other third parties, are undergoing
remediation pursuant to Administrative Orders issued by EPA in September
1990 and November 1992 (the "Orders") to the Company, and other responsible
parties, including Inmar Associates, Inc. ("Inmar") and affiliates of Waste
Management, Inc. ("WMI"). Inmar is controlled by Marvin H. Mahan, a former
principal shareholder and former officer and director of the Company, and
leased real property upon which the landfill is situated to the Company.
During May, 2002 the U. S. Department of Justice, on behalf of EPA
filed a suit entitled United States of America vs. Chemical Waste
Management, Inc, et al, in the US District Court for the District of New
Jersey (Case No. 02-2077 (DMC)). The named defendants were Transtech, Kin-
Buc and Filcrest, Inmar, WMI and affiliates of WMI specifically Chemical
Waste Management, Inc., Earthline Company, Anthony Gaess, SCA Services,
Inc., SCA Services of Passaic, Inc., Waste Management Holdings, Inc. and
Wastequid, Inc. (WMI and its affiliates collectively referred herein as the
"WMI Group"). EPA sought payment of past response costs, $3.5 million as of
July 1999, allegedly incurred with respect to the Kin-Buc Landfill. In
addition, EPA sought penalties for delays allegedly experienced in
completing the remediation pursuant to the Orders. The claim for
unreimbursed past response costs increased to approximately $4.2 million,
and the claim for penalties totaled $18.1 million. Both amounts were also
subject to interest.
During September 2002, the New Jersey Department of Environmental
Protection and New Jersey Spill Compensation Fund (together referred herein
as the "NJ Agencies") filed a similar suit against the same respondents,
entitled New Jersey Department of Environmental Protection, and Acting
Administrator, New Jersey Spill Compensation Fund v. Chemical Waste
Management, Inc. et. al. in the United States District Court, District of
New Jersey (Case No. 02CV 4610 (DMC)), that sought reimbursement of
unspecified past costs allegedly incurred with respect to the Kin-Buc
Landfill and for unspecified alleged Natural Resource Damages. This suit
was consolidated with the EPA suit brought in May 2002 discussed above.
The WMI Group had agreed to indemnify the Company against EPA and New
Jersey Agencies claims for past response costs and Natural Resource Damages
pursuant to the terms of a 1997 Settlement Agreement (discussed below).
However, the terms of the 1997 Settlement Agreement arguably did not provide
the Company with complete indemnification against the penalties sought by
EPA in this action.
On December 30, 2004, Transtech together with Kin-Buc, and Filcrest
executed consent decrees which resolved the claims brought against the
Company and others during 2002 by EPA, the New Jersey Department of
Environmental Protection and New Jersey Spill Compensation Fund regarding
the Kin-Buc Landfill as set forth in the consolidated cases of United States
of America; New Jersey Department of Environmental Protection; and Acting
Administrator, New Jersey Spill Compensation Fund v. Chemical Waste
Management, Inc.; Earthline Company; Filcrest Realty, Inc.; Anthony Gaess;
Inmar Associates, Inc.; Kin-Buc, Inc.; SCA Services, Inc.; SCA Services of
Passaic, Inc.; Transtech Industries, Inc.; Waste Management, Inc.; and
Wastequid, Inc., Civil Action No. 02-2077 (the "Lawsuit") before the U.S.
District Court for the District of New Jersey (the "Court"). The Court
entered the consent decrees on October 18, 2005.
The documents entered by the Court on October 18, 2005 were (i) a
Consent Decree executed by the Company, Inmar, the WMI Group, the U.S.
Department of Justice and EPA on December 30, 2004 (the "Federal Consent
Decree"), (ii) a contract (the "CLF Contract") between the Company and the
Clean Land Fund ("CLF"), a third party non-profit organization, (iii) deeds
transferring title (the "Deeds") to real property owned by Kin-Buc and
certain real property owned by Filcrest (such Kin-Buc and Filcrest property
referred herein as the "Subject Property") to CLF, (iv) conservation
easements (the "Conservation Easements") granted by Kin-Buc and Filcrest
with respect to the Subject Property to CLF, and (v) a Consent Decree among
the Company, Inmar, the WMI Group and the New Jersey Department of
Environmental Protection and New Jersey Spill Compensation Fund also
executed on December 30, 2004(the "State Consent Decree").
The Federal Consent Decree resolved the claims of EPA as alleged in the
Lawsuit. EPA agreed to accept a $2,625,000 cash payment, plus interest from
November 8, 2004, from the WMI Group in satisfaction of EPA's claims for
past response costs against all defendants, including the Company. EPA
agreed to resolve its claim for penalties in exchange for a cash payment of
$100,000, plus interest from November 8, 2004, of which approximately
$35,000 was paid by the Company, plus additional consideration consisting of
(a) the implementation by the Company of an Open Space Preservation Project
through the granting of the Conservation Easements on the Subject Property
to CLF, thereby preserving the Subject Property as open space in perpetuity,
and through the execution of the Deeds thereby transferring title of the
Subject Property to CLF, (b) the commitment by the Company to enter into a
contract with CLF whereby CLF would develop and implement a Wetlands
Restoration and Land Management Project, described below, for parcels of the
Subject Property together with, if possible, certain neighboring properties
owned or leased by third parties all in accordance with the Federal Consent
Decree, and (c) an initial payment of $108,000 to CLF to fund its work
related to (a) and (b) above, of which the Company paid $68,000 in December
2004, pursuant to the CLF Contract. An additional $15,000 shall be paid to
CLF, $5,000 of which shall be paid by the Company, if certain events
transpire.
The Subject Property consists of one parcel of approximately 25 acres
owned by Kin-Buc upon which a portion of the Kin-Buc Landfill is situated
and parcels totaling approximately 74 acres of predominately wetlands in the
vicinity of the Kin-Buc Landfill owned by Filcrest. The Kin-Buc parcel and
certain of the Filcrest parcels are undergoing remediation pursuant to the
Orders and performed by SCA. The Company's investment in the Subject
Property was written-off for book and tax purposes during the 1980's.
The Wetlands Restoration and Land Management Project is to be
accomplished through the implementation of an Open Space Land Management
Plan, Wetlands Restoration Plan, an Initial Financing Plan and Final
Financing Plan (collectively referred herein as the "Plans") that are to be
developed and implemented by CLF pursuant to the CLF Contract and in
accordance with a Statement of Work embodied in the Federal Consent Decree.
The objective of the Plans is to identify, restore, maintain and make self-
sustaining historic and current wetlands on certain parcels of the Subject
Property, and to the extent possible, certain neighboring property held or
leased by third parties, and ensure that such properties are preserved in
perpetuity as open space and managed in accordance with the terms of the
Federal Consent Decree.
The EPA may impose financial penalties on the Company if the Company or
CLF should fail to adhere to the terms and conditions of the Federal Consent
Decree. A $100,000 penalty may be imposed under certain circumstances if
the CLF Contract is abandoned by the Company. If CLF is unwilling or unable
to fulfill the CLF Contract, the Company must make its best effort to find a
suitable replacement and obtain EPA approval of such replacement. Other
violations may each be subject to a penalty of $500 per day. The Company
and CLF may be substantially relieved from the development and
implementation of the Plans if either (i) EPA determines the Plans cannot be
completed in accordance with the terms of the Federal Consent Decree, or
(ii) the U.S. Army Corp of Engineers should proceed with the pending
wetlands restoration project submitted to them by CLF for properties in the
area including the Subject Property.
The State Consent Decree addresses the claims of the New Jersey
Department of Environmental Protection and New Jersey Spill Compensation
Fund (the "NJ Agencies"). The NJ Agencies agreed to resolve their claims
against the defendants in exchange for a cash payment of $110,000 from the
WMI Group and the commitment of the WMI Group to perform wetlands
restoration on certain property in the vicinity of the Kin-Buc Landfill,
including certain parcels of the Subject Property.
The Township of Edison owns the majority of the real property which
adjoins or surrounds the lots deeded to CLF by the Company in December
2004. CLF has not yet been successful in its effort to obtain the consent
of the Township of Edison to incorporate portions of its land into the
Wetlands Restoration and Land management Project, and to gain access to the
Township's land in order to perform its obligations pursuant to the CLF
contract. As a result, the implementation of the Plans has been delayed,
and certain of the milestones specified within the Federal Consent Decree
have not been achieved. However, EPA has been kept informed of CLF's
efforts and has participated in certain negotiations between CLF and the
Township of Edison. EPA has indicated that it does not, at this point,
intend to impose the financial penalties discussed above.
As previously reported, during 1990, Transtech, Kin-Buc and
Filcrest commenced a suit in the United States District Court for the
District of New Jersey entitled Transtech Industries, Inc. et al. v. A&Z
Septic Clean et al. (Civil Action No. 2-90-2578(HAA)) (the "Kin-Buc Cost
Recovery Action") against non-municipal generators and transporters of
hazardous waste disposed of at the Kin-Buc Landfill (the "PRPs") for
contribution towards the cost of remediating the Kin-Buc Landfill. On
December 23, 1997, the Company entered into four agreements which settled
this suit, earlier suits and derivative lawsuits all related to the
allocation of costs of remediation. One of the December 23, 1997 agreements
provided SCA's Parties commitment to defend and indemnify the Company from
certain future liability for and in connection with the remediation of the
site. SCA also agreed to defend and indemnify Transtech, Kin-Buc and
another subsidiary, Filcrest Realty, Inc. ("Filcrest") from claims by non-
settling non-municipal waste and municipal waste potentially responsible
parties in the litigation.
Specifically, pursuant to indemnification provisions of the 1997
Agreement the SCA and certain related parties (the "SCA Parties") are to
defend and indemnify the Company from and against (i) all claims, demands
and causes of action which have been made or brought, or hereafter may be
made or brought, by the EPA or any other federal, state or local
governmental or regulatory agency, against the Company, and (ii) all
liability, loss, cost and expense (including reasonable attorneys' fees)
which may be suffered or incurred by the Company, which, in the case of (i)
and (ii) above, arise from (y) the Orders (except for fines or penalties
levied or imposed against the Company for or on account of any of the
Company' actions or omissions on or before the effective date of the 1997
Agreement), or (z) any other orders or directives, and environmental or
other applicable laws, regulations or ordinances, which are directed
against or relate to the Kin-Buc Landfill or any portion thereof,
operations at the Kin-Buc Landfill, the remediation of the Kin-Buc Landfill
(except for the fines and penalties identified in (y) above), environmental
conditions at the Kin-Buc Landfill or conditions resulting from releases
from the Kin-Buc Landfill. The SCA Parties are not obligated to reimburse
the Company for (i) response costs paid by the Company, on or before the
effective date of the 1997 Agreement, or (ii) attorney's fees,
disbursements or other costs and expenses arising from the Company's
prosecution, defense or settlement of the Kin-Buc Cost Recovery Action or
the derivative suits paid or incurred by the Company, on or before the
effective date of the 1997 Agreement.
The SCA Parties shall also defend and indemnify the Company from
and against all claims, demands and causes of action (including toxic tort
and similar claims and causes of action), and all liability, loss, cost and
expense (including reasonable attorneys' fees), which have been, or
hereafter may be made, brought, suffered or incurred by the Company arising
from environmental conditions at, or related to, the Kin-Buc Landfill or
any portion thereof, or the remediation and maintenance of the Kin-Buc
Landfill. Nothing contained herein shall be deemed to obligate the SCA
Parties to reimburse the Company for (i) response costs paid by the Company
on or before the effective date of the 1997 Agreement, or (ii) attorney's
fees, disbursements or other costs and expenses arising from the Company'
prosecution, defense or settlement of the Kin-Buc Cost Recovery Action or
the derivative suits paid or incurred by the Company on or before the
effective date of the 1997 Agreement.
The term Kin-Buc Landfill is defined in the 1997 Agreement as the
Kin-Buc Landfill together with any real property located outside the
boundaries of the Kin-Buc Landfill into which hazardous substances or
contaminants may have migrated or threatened to migrate from the Kin-Buc
Landfill or to which hazardous substances or contaminants deposited in the
Kin-Buc Landfill finally came to rest or on which hazardous substances or
contaminants were deposited from the operation of the Kin-Buc Landfill.
The Company remains a responsible party under the aforementioned
Administrative Orders issued by EPA, and continues to incur administrative
and legal costs complying with such Administrative Orders.
Insurance Claims for Past Remediation Costs
During 1995, Transtech and its wholly-owned subsidiaries Kin-Buc, Inc.
and Filcrest Realty, Inc. commenced suit in the Superior Court of New
Jersey, Middlesex County, entitled Transtech Industries, Inc. et. al v.
Certain Underwriters at Lloyds et al., Docket No. MSX-L-10827-95 to obtain
indemnification from its excess insurers who provided coverage during the
period 1965 through 1986 against costs incurred in connection with the
remediation of sites in New Jersey (the "Lloyds Suit"). The defendant
insurers included various London and London Market insurance companies,
First State Insurance Company and International Insurance Company
collectively referred herein as "Defendant Insurers".
During June 1999, August 1999 and July 2000 the Company settled claims
against the First State Insurance Company, International Insurance Company
and the estate of an insolvent excess insurer, respectively. The
settlements provided payments to the Company totaling $302,500.
The Company had assigned certain of its claims for remediation costs
incurred at a site of past operations located in Carlstadt, New Jersey to
certain third-parties (the "AT&T Group") in conjunction with the September
1995 settlement of certain litigation related to such site (see "The
Carlstadt SCP Site" below). Subsequent to executing the September 1995
settlement, certain members of the AT&T Group conveyed their rights under
such settlement to other members of the AT&T Group (the "Cooperating PRP
Group"). During 1998, the Company and the Cooperating PRP Group agreed to
cooperate in the pursuit of their respective excess insurance claims
addressed in the Lloyd's Suit.
The Company and the Cooperating PRP Group agreed to an allocation of the
proceeds from the Lloyds Suit that provided the Company 52% of the proceeds
to be received from the settling excess insurers, plus all of the interest
earned on both the Company's and Cooperating PRP Group's portion of the
settlement proceeds while such proceeds were collected and held in escrow
pending consummation of the settlement. The Company also agreed to pursue
non-settling excess insurers and that the Cooperating PRP Group shall
receive the first $250,000 collected from the non-settling excess insurers,
less attorney fees and expenses, and the Company shall retain the balance of
amounts recovered, if any.
During October 2001 the Company and the Cooperating PRP Group entered
into a settlement agreement with certain Defendant Insurers (certain
Underwriters at Lloyd's, London, and certain London Market Insurance
Companies (the "London Market Insurers")) (the "October 2001 Settlement
Agreement"). The October 2001 Settlement Agreement was consummated during
February 2002, when London Market Insurers representing approximately 84.7%
of the value assigned to the subject policies paid their allocated portion
of the settlement amount. The Company's share of the October 2001
Settlement Agreement proceeds and interest earned during the collection of
the proceeds was approximately $13,013,000 of which $9,513,000 was reported
in the other income section of the Company's Consolidated Statement of
Operations for the year ended December 31, 2002, net of related costs, and
$3,500,000 was placed in escrow pending the outcome of litigation regarding
the arbitration with SCA Services, Inc. discussed below.
The October 2001 Settlement Agreement is intended to be, a full and
final settlement that releases and terminates all rights, obligations and
liabilities of participating London Market Insurers, the Company and the
Cooperating PRP Group with respect to the subject insurance policies.
Some of the Defendant Insurers are insolvent. The estates of some of
these insolvent insurers have sufficient assets to make a partial
contribution toward claims filed by the Company. Pursuant to their
respective liquidation plans, the estates of insolvent insurers make
payments toward agreed claims based upon the amount of their recovered
assets and expenditures funded from such assets. The estates may elect,
based upon their financial situation, to make additional distributions
toward agreed claims, however there are no assurances that distributions
will be paid. During the year ended December 31, 2005, the Company
received payments totaling $4,514,000 with respect to settled claims
against the estates of five insolvent insurers. Additional claims against
the five estates have been barred in accordance with their liquidation
plans.
During the year ended December 31, 2006 the Company received additional
distributions, which totaled $455,000, from the estates of the five
insolvent insurers with whom the Company reached settlement during 2005.
In addition, the Company received a total of $145,000 in 2006 from an
initial distribution from the estates of two insolvent excess insurers, the
North Atlantic Insurance Company Limited and Bryanston Insurance Company
Limited.
During the year ended December 31, 2007 the Company received
supplemental distributions totaling $87,000 from the estates of three
insolvent carriers.
The insurers that participated in the Lloyd's Settlement, the three
insurers that settled in 1999 and 2000, and the five insolvent insurers
represent approximately 98% of the value of the coverage provided under the
policies that were the subject of the Lloyd's Suit, as measured by the
liability apportioned to each of the Defendant Insurers at the time of the
October 2001 settlement.
The Company continues to pursue claims against certain excess insurance
carriers that have not participated in any of the previous settlements.
However, the Company cannot predict the amount of the proceeds it may
eventually receive on account of such claims, if any.
SCA & SC Holdings, Inc.
In conjunction with the 1997 settlement of the litigation related to the
Kin-Buc Landfill discussed above, the Company agreed to allow SCA to claim
against a portion of the proceeds, arising from its lawsuit against its
excess insurance carriers, discussed above. The maximum amount which could
be found to be payable to SCA from the Lloyds Suit settlement proceeds, $3.5
million, was placed directly into escrow until the amount of such obligation
is determined in accordance with the terms of the 1997 settlement. A
calculation of the amount due pursuant to the 1997 Agreement was presented
to SCA during March 2002. SCA subsequently notified the Company of its
objection to values utilized in that calculation, contending it was owed
$3.5 million. Unable to resolve the disputed issues, during August 2002 the
Company and SCA submitted the dispute regarding the amount due to binding
arbitration for resolution in accordance with the terms of the 1997
Agreement. On February 6, 2004 the arbitrator issued the final of three
conflicting rulings, finding in favor of SCA awarding it $3.5 million.
The Company commenced two separate actions during February 2004 to
either vacate or modify the arbitrator's award. The first action entailed
the filing of a civil complaint in the United States District Court for the
District of New Jersey, entitled Transtech Industries, Inc. v. SC Holdings,
Inc.. SC Holdings, Inc. is the alleged corporate successor to SCA. The
second action was the filing of a motion under the Kin-Buc Cost Recovery
Action (the existing case in the United States District Court for the
District of New Jersey) under which claims related to the 1997 Agreement
had been addressed. On February 17, 2004 SC Holdings, Inc. filed a
complaint against the Company in the Supreme Court of New Jersey, Law
Division, Middlesex County entitled SC Holdings, Inc. f/k/a SCA Services,
Inc. v. Transtech Industries, Inc. (Docket No. L-1214-04). SCA sought the
Court's confirmation of the arbitrator's award and a judgment in favor of
SCA of $3.5 million. During April 2004, the Company and SC Holdings, Inc.
agreed to be bound by the decisions and final unappealable orders rendered
in the Kin-Buc Cost Recovery Action. Accordingly, SC Holdings, Inc. agreed
to dismiss the suit initiated in Middlesex County and the Company agreed to
dismiss the suit initiated with the United States District Court against SC
Holdings, Inc.
The arbitrator's ruling was affirmed by the District Court on October
28, 2005. In December, 2005 the Company filed an appeal of the District
Court's ruling with the United States Court of Appeals for the Third
Circuit (No. 05-5246), and oral arguments were made before the Court during
January 2008. The Court rendered its decision on March 24, 2008 affirming
the District Court's decision. The Company has not yet decided whether it
will appeal this decision. The amount held in escrow is not reflected on
the Company's financial statements; therefore the Appeal Court's decision
will not adversely impact the Company's financial statements. The Company
will recognize income equal to the amount of the escrow remaining after
payment of amounts due SCA, if any, in the period such funds are released
from escrow.
The Carlstadt SCP Site
Transtech was one of 43 respondents to a September 1990 Administrative
Order of EPA concerning the implementation of interim environmental
remediation measures at a site in Carlstadt, New Jersey owned by Inmar and
allegedly operated by Transtech as a solvents recovery plant for
approximately five years ending in 1970. The site is known as the
Scientific Chemical Processing Superfund Site (the "SCP Site").
In 1988, Transtech, Inmar and Marvin H. Mahan were sued in a civil
action in the United States District Court for the District of New Jersey
entitled AT&T Technologies, Inc. et al. v. Transtech Industries, Inc. et al.
v. Allstate Insurance Company et al. (the "AT&T Suit") by a group of
generators of waste (the "AT&T Group") alleging, among other things, that
the primary responsibility for the clean-up and remediation of the SCP Site
rests with Transtech, Inmar and Marvin H. Mahan, individually.
In September 1995, the Court approved a settlement of the AT&T Suit
among Transtech, Inmar, Marvin H. Mahan, the AT&T Group and other generators
and transporters of waste handled at the SCP Site who had contributed to the
costs of the remediation of the site. Pursuant to such settlement,
Transtech, Inmar and Marvin H. Mahan agreed to (i) pay $4.1 million of
proceeds from settlements with primary insurers of a coverage action brought
by the Company and Inmar against their primary and excess insurers, (ii) pay
an additional $145,000 ($72,500 from Transtech and $72,500 from Inmar and
Marvin H. Mahan), and (iii) assign certain of their SCP Site-related
insurance claims against excess insurers (see "Insurance Claims for Past
Remediation Costs" above) in exchange for a complete release from these
parties of all liability to them arising from or on account of environmental
contamination at the SCP site and the parties' remediation of the same. The
payments described above were made into accounts established by the AT&T
Group.
Notwithstanding the September 1995 settlement, the Company may have
liability in connection with the SCP Site to EPA for its costs of overseeing
the remediation of the site, and to parties who had not contributed to the
remediation at the time the settlement was approved but who may later choose
to do so.
During September 2002, EPA issued a notice of potential liability and of
consent decree violations to potentially responsible parties regarding the
SCP Site. On November 12, 2004 an Unilateral Administrative Order (the
"UAO") was issued by EPA naming fifteen companies, including the Company,
as respondents. The UAO requires the respondents to "make best efforts to
cooperate and coordinate with Settling Defendants" who are in the process
of implementing the response actions required under the UAO. The Settling
Defendants is a group of 69 PRPs that have entered into a Consent Decree
that requires the implementation of the same response actions as the UAO.
The response actions include the design and implementation of the remedy
selected for the second operable unit ("OU2") at the SCP Site, reimburse
the United States for certain past costs allegedly incurred at the SCP
Site, and make payment of certain future response costs that may be
incurred in connection with the implementation of the OU2 remedy. The
"best efforts to cooperate and coordinate with Settling Defendants"
includes the requirement to negotiate with the Settling Defendants as to
either the amount of work required under the UAO the Company will be
willing to assume or the amount of the cash contribution the Company is
willing to make toward the implementation of the UAO. The EPA estimated
the present value of the selected remedy is $7.5 million which includes
capital cost of $4.7 million plus annual O&M costs of $180,000 per annum.
The Company requested a complete and detailed accounting of the actual
total expenditures for the remediation work completed at the SCP Site from
the AT&T Group. The AT&T Group has relayed that in aggregate, $15 million
has been expended in regard to the site. The Company, as stated above,
together with the property owner, Inmar Associates, Inc., had contributed
$145,000 cash and $4.1 million of proceeds from the settlement with primary
insurance carriers in 1995, an additional $12.0 million from the Company's
2001 settlement with its excess insurance carriers and an additional
$250,000 in 2005 from the claims being pursued against the insolvent excess
carriers, to a Qualified Settlement Fund established to fund costs incurred
for the remediation of the Carlstadt SCP Site which is administered by the
SCP Cooperating PRP Group. Such contributions total $16.4 million, plus
interest earned, which the Company believes should more than satisfy the
share of remediation costs which may be found attributable to the Company
for the SCP Site. The Company has informed EPA of its intent to comply
with the UAO and cooperate and coordinate with the Settling Defendants'
representative.
On October 2, 2007, the Company filed a motion under the previously
reported action 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), seeking an Order compelling the SCP
Cooperating PRP Group to account for how and how much it has spent of the
$16,450,000 paid by the Company to it as recited above. The October 2007
motion was denied by the Superior Court during January 2008. During
January 2008 the Company filed an appeal of the Superior Court's decision
with the Superior Court of New Jersey Appellate Division entitled Transtech
Industries, Inc. v. Certain Underwriters at Lloyds London and SCP Carlstadt
PRP Group, (Docket No. A-002604-07T2).
Berry's Creek
The Company was one of 158 recipients of a Notice of Potential
Liability and Request to Perform Remedial Investigation/Feasibility Study
(the "Notice"), dated March 9, 2006, and issued by EPA regarding the
contamination of the Berry's Creek Study Area (the "Creek Area") located in
Bergen County, N.J. A tributary adjacent to the SCP Site in Carlstadt,
N.J. flows into Berry's Creek. The Creek Area includes the approximately
seven miles long water body known as Berry's Creek, a canal, all
tributaries to Berry's Creek and related wetlands. Tidal areas of the
river into which Berry's Creek empties is also subject of the Notice. Each
recipient of the Notice is a potentially responsible party under CERCLA,
and may be held liable for the cleanup of the Creek Area and costs EPA has
incurred with regard to the Creek Area. Since the investigation and
feasibility study regarding the scope of the remediation of the Creek Area
is ongoing, and no discovery has taken place concerning allegations against
the Company, it is not possible to estimate the Company's ultimate
liability, if any, with respect to the Creek Area.
Five Points Redevelopment Zone
The Company owns approximately 364 contiguous acres in the Township of
Deptford, N.J. (the "Township"). Approximately 110 of the 364 acres are
occupied by the closed Kinsley's Landfill, which is owned by the Company's
wholly owned subsidiary, Kinsley's Landfill, Inc. On December 10, 2007 the
Township's Mayor and Town Council approved a resolution designating an
area, including approximately 342 acres of the Company's property, as an
area in need of redevelopment in accordance with New Jersey Statute
40A:12A-5.
This action follows the Township's Planning Board's August 8, 2007
approval of the study prepared by the Township's planner entitled "Five
Points Study Area, Preliminary Investigation: Determination of an Area in
Need of Redevelopment" (the "Five Points Study"). The Five Points Study
concluded that the subject area (the "Five Points Study Area") should be
designated a redevelopment area pursuant to the New Jersey Local Housing
and Redevelopment Law.
The designation of a redevelopment area under the New Jersey Local
Housing and Redevelopment Law grants a municipality many options to achieve
its objectives regarding the ultimate redevelopment of property located
within the redevelopment area. For example, municipalities have the
authority to designate a third party (generally a land developer) to
develop the redevelopment area in a manner consistent with the
municipalities' redevelopment plan for the area. In addition, in order to
advance the redevelopment project, municipalities may acquire property in
the redevelopment area for redevelopment through good faith negotiations
between the property owner and the designated redeveloper or through their
powers of eminent domain, compensating the property owner for its fair
market value.
The process to determine the ultimate redevelopment plan for that
redevelopment area may take years to complete, and impact the use or sale
of property located within the redevelopment area during the process.
There is no specific time frame set forth in the Local Housing and
Redevelopment Law for completion of a redevelopment project. The owner of
property included in a redevelopment area may initiate suit against a
municipality to challenge the creation of the redevelopment area, the
designation of a redeveloper, the adoption of a redevelopment plan and/or
the amount of compensation offered for property.
The Company is uncertain as to the Township's final intentions with
respect to the Five Points Study Area, or if all or any of the Company's
property will ultimately be included in the redevelopment plan. The
Company had notified both the Township's Planning Board and the Township's
Town Council of the Company's objections to certain errors and
mischaracterizations contained within the Five Points Study, as well as the
Planning Board's conclusion to approve the Five Points Study and recommend
that the Township declare the Five Points Study Area a redevelopment area
pursuant to the Local Housing and Redevelopment Law.
During September 2007, two subsidiaries of Transtech commenced
litigation entitled Kinsley's Landfill, Inc., and Birchcrest, Inc. v.
Planning Board of the Township of Deptford (No. L-001536-07) in the Superior
Court of New Jersey, Law Division, Gloucester County. During December 2007,
the complaint was amended to include The Township of Deptford, Benderson
Properties, Inc. and certain of its affiliates as defendants. The suit
seeks, among other remedies, to reverse and set aside the Township's
Planning Board approval of the 2007 study prepared by the Township's
planner.
General
With respect to the ongoing matters described above, the Company is
unable to predict the outcome of these claims or reasonably estimate a range
of possible loss given the current status of the claims. However, the
Company believes it has valid defenses to these matters and intends to
contest the charges vigorously.
In the ordinary course of conducting its business, the Company becomes
involved in certain lawsuits and administrative proceedings (other than
those described herein), some of which may result in fines, penalties or
judgments being assessed against the Company. The management of the Company
is of the opinion that these proceedings, if determined adversely
individually or in the aggregate, are not material to its business or
consolidated financial position.
The uncertainty of the outcome of the aforementioned litigation and the
impact of future events or changes in environmental laws or regulations,
which cannot be predicted at this time, could result in reduced liquidity,
increased remediation and post-closure costs, and other potential
liabilities. A significant increase in such costs could have a material
adverse effect on the Company's financial position, results of operations
and net cash flows. The Company may ultimately incur costs and liabilities
in excess of its available financial resources.
Part I, Item 4. Submission of Matters to a Vote of
Security Holders.
No matters were submitted to a vote of the Company's security holders
during the quarter ended December 31, 2007.
PART III
Part III, Item 9. Directors, Executive Officers, Promoters
Control Persons and Corporate Governance;
Compliance With Section 16(a) of the
Exchange Act.
Directors and Executive Officers of the Company
Robert V. Silva (64) - President and Chief Executive Officer and a
director of the Company from April 1991 and Chairman of the Board of
Directors from November 1991. Mr. Silva served as a consultant to the
Company from December 1990 until his appointment in April 1991 as an
officer of the Company. Mr. Silva was employed from September 1987 to
December 1990 as Executive Vice President of Kenmare Capital Corp.
("Kenmare"), an investment firm, and provided financial and management
consulting services to companies acquired by Kenmare's affiliates. In
connection with such financial and management services, Mr. Silva served as
Vice President and a Director of Old American Holdings, Inc. and, its
subsidiary from 1988 to 1990, and Vice President and a Director of Compact
Video Group, Inc. and its subsidiaries from 1988 to 1991 and of Manhattan
Transfer/Edit, Inc. from 1989 to 1991. Mr. Silva also served as a Director
of General Textiles from 1989 to 1991. From June 1985 to September 1987,
Mr. Silva served as Vice President of, and provided management consulting
services to, The Thompson Company, a private investment firm controlled by
the Thompson family of Dallas, Texas. Mr. Silva served as Chairman and
Chief Executive Officer of Hunt Valve Company, Inc., a former subsidiary of
the Company, from March 1, 1996 to his resignation effective January 1,
1997, and as a Director of Hunt from March 1996 to August 1998. Mr. Silva
also served as Vice President and a Director of ValveCo Inc., the entity
which acquired Hunt, from October 10, 1995 to his resignation effective
January 1, 1997, and was a stockholder in ValveCo Inc. from March 1, 1996
through August 1998. From September 1996 to February 14, 1997, Mr. Silva
served as a Director of Hunt's subsidiary, Hunt SECO Engineering, Ltd. and
its subsidiaries. Mr. Silva is also the principal of Robert V. Silva and
Company, LLC., a private investment firm. Mr. Silva served as Chairman and
Chief Executive Officer of Fab-Tech Industries of Brevard, Inc. from
September 1998 through November 1, 2000 and March 31, 2000, respectively.
He continued to serve as a Director of Fab-Tech until his resignation in
September 2002. Mr. Silva also served as a Director of Indesco
International, Inc. from October 2000 through February 2002. Mr. Silva's
former Wife is the sister-in-law of Gary Mahan, the son of Marvin H. Mahan
and Ingrid T. Mahan.
In 2002, Mr. Silva was subjected to a summary proceeding under New
Jersey's Domestic Violence Act. Mr. Silva denied all of the allegations of
the domestic violence complaint. The trial court conducted a summary
proceeding and concluded at the end of it that Mr. Silva had committed an
act of domestic violence. Mr. Silva filed an appeal of that finding. The
Appellate Court reversed the Trial Court's determination finding that the
trial judge had conducted those proceedings in such a manner as to
constitute a manifest miscarriage of justice. The case was remanded for a
second trial. At the end of the second trial, the trial judge concluded
that Mr. Silva had committed an act of domestic violence relying in large
part on a timeline that the trial court had developed on its own. Mr.
Silva's attorneys filed a motion to the trial court to reconsider its
decision based on extrinsic evidence including cellular telephone/tower
information which fixed Mr. Silva's geographic location in such a way that
convinced this trial court that Mr. Silva could not have committed the act
of domestic violence. Specifically, the trial court concluded that Mr.
Silva had perfected his defense of impossibility and then made an express
finding that he had not committed an act of domestic violence. The
purported victim filed an appeal of this second domestic violence decision.
That appeal was argued before the appellate division and denied. The
initial decision of the domestic violence court back in 2002 resulted in
the issuance of three criminal indictments including assault all based on
allegations which were identical to those tried in the domestic violence
court. Mr. Silva obtained separate criminal defense counsel for these
charges and has pleaded not guilty. Mr. Silva is aggressively defending
all of these allegations in the criminal court. The Company has reviewed
all of these allegations and the court proceedings and concludes that the
decision of the second domestic violence court that Mr. Silva did not
commit an act of domestic violence is correct. The pending allegations do
not affect the Company's assessment of Mr. Silva's integrity or his ability
to perform fully his functions as Chief Executive Officer. The Company
fully supports Mr. Silva and expects him to be completely exonerated.
Arthur C. Holdsworth, III (59) - A director of the Company since 1988.
Since June 1999, Mr. Holdsworth has been General Sales Manager at the Tilcon
NJ Division of Tilcon NY, Inc. From August 1991 through June 1999 Mr.
Holdsworth was Vice President of Sales at Millington Quarry, Inc. Prior to
that and from 1977, Mr. Holdsworth was General Manager of Dallenbach Sand
Co., Inc. Members of the Mahan family own Millington Quarry, Inc. and
previously owned Dallenbach Sand Co, Inc. Mr. Holdsworth is the brother-in-
law of Roger T. Mahan, a controlling shareholder of the Company.
Andrew J. Mayer, Jr. (52) - Vice President-Finance and Chief Financial
Officer of the Company from November 1991 and a director of the Company from
December 1991 and, from April 1992, Secretary of the Company. From 1988 to
November 1991, Mr. Mayer served as Vice President, Secretary and Treasurer
of Kenmare. In connection with management and financial services provided
by Kenmare, Mr. Mayer served in a variety of capacities for the following
companies: Old American Holdings, Inc. and its subsidiary from 1988 to
1991; The Shannon Group, Inc. and its subsidiaries from 1988 to 1990;
Detroit Tool Group, Inc. and its subsidiaries from 1989 to 1990; Compact
Video Group, Inc. from 1988 to 1991; Manhattan Transfer/Edit, Inc. from 1989
to 1991; and General Textiles from 1989 to 1990. Mr. Mayer served as
Executive Vice President of Hunt Valve Company, Inc., a former subsidiary of
the Company from March 1, 1996, the date the Company sold Hunt, to his
resignation effective January 1, 1997. Mr. Mayer served as Vice President -
Chief Financial Officer of ValveCo Inc. from April 3, 1996 through his
resignation effective January 1, 1997, and was a stockholder in ValveCo Inc.
from March 1, 1996 through August, 1998. From September 1996 to February
14, 1997, Mr. Mayer served as a Director of Hunt's subsidiary, Hunt SECO
Engineering, Ltd. and its subsidiaries. Mr. Mayer also served as a
Director, Chief Financial Officer and Secretary of Fab-Tech Industries of
Brevard, Inc. from September 1998 through November 1, 2000. He continuedto
serve as a Vice President of Fab-Tech until his resignation in September,
2002.
Compliance with Section 16(a) of Securities
Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent
of a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange
Commission. Officers, directors and greater than ten-percent shareholders
are required by SEC regulation to furnish the Company with copies of all
Section 16(a) forms they file. Based solely on a review of the copies of
such forms furnished to the Company, or written representations that no
Forms 5 were required, the Company believes that during the Company's fiscal
year ending December 31, 2007 all Section 16(a) filing requirements
applicable to its officers, directors and greater than ten-percent
beneficial owners were complied with.
Code of Ethics
As part of the Company's system of corporate governance, the Board of
Directors has adopted a Code of Ethics that is applicable to all employees
and specifically applicable to the chief executive officer and chief
financial officer. The Code of Ethics is filed as Exhibit 14 to this Form
10-KSB and is also available on the Company's website at
www.Transtechindustries.com. The Company intends to disclose any changes in
or waivers from the Code of Ethics by filing a Form 8-K or by posting such
information on the Company's website.
Corporate Governance
There have been no changes in any procedures by which security holders
may recommend nominees to the Company's board of directors. In addition,
the Company currently has no specific audit committee. Andrew J. Mayer,
Jr., board member and Chief Financial Officer, would satisfy the
requirements of an "audit committee financial expert" pursuant to Item
407(d)(5)(ii) of Regulation S-B, but, as an executive officer of the
Company, would not be considered independent under NASDAQ or SEC rules.
Part III, Item 10. Executive Compensation.
A. Summary Compensation Table
The following table summarizes the compensation awarded to, paid to or
earned by the principal executive officer of the Company who is the
President and Chief Executive Officer of the Company (the "Chief Executive
Officer") and the Vice President-Finance, Chief Financial Officer and
Secretary (the "Named Executive Officer") in the years ending December 31,
2007 and 2006 ("Fiscal 2007" and "Fiscal 2006", respectively) for services
rendered by them to the Company in all capacities during such year. The
Chief Executive Officer and the Named Executive Officer were the only
executive officers of the Company whose total annual compensation exceeded
$100,000 and were either (a) serving as executive officers of the Company at
December 31, 2007 or 2006 or (b) during Fiscal 2007 or Fiscal 2006.
Non-
Nonequity qualified
incentive deferred All
Plan compen- Other
Name and Principal Fiscal Stock Option compen- sation Compen-
Position Year Salary Bonus Awards Awards sation earnings sation Total
$ $ $ $ $ $ $ $
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)
Robert V. Silva 2007 $260,000 $35,000 0 0 0 0 $17,560 $312,560
President and Chief 2006 $253,000 $54,863 0 0 0 0 $17,275 $325,138
Executive Officer
Andrew J. Mayer, Jr. 2007 $216,000 $34,135 0 0 0 0 $14,846 $263,981
Vice President- 2006 $206,000 $53,962 0 0 0 0 $14,970 $274,932
Finance, Chief
Financial Officer
and Secretary
|
The above table sets forth in the referenced column:
(a) the name and principal position of the named executive officer; (b)
the fiscal year covered; (c) the dollar value of base salary (cash and non-
cash) earned by the named executive officer during the fiscal year covered;
(d) the dollar value of bonus (cash and non-cash) earned by the named
executive officer during the fiscal year covered; (e) for awards of stock,
the dollar amount recognized for financial statement reporting purposes with
respect to the fiscal year in accordance with FAS 123R; (f) for awards of
options, with or without tandem SARs, the dollar amount recognized for
financial statement reporting purposes with respect to the fiscal year in
accordance with FAS 123R; (g) the dollar value of all earnings for services
performed during the fiscal year pursuant to awards under non-equity
incentive plans as defined in paragraph (a)(5)(iii) of Item 402 of
Regulation S-B, and all earning on any outstanding awards; (h) above-market
or preferential earnings on compensation that is deferred on a basis that is
not tax-qualified, including such earnings on nonqualified defined
contribution plans; (i) all other compensation for the covered fiscal year
that the small business issuer could not properly report in any other column
of the Summary Compensation Table; and (j) the dollar value of total
compensation for the covered fiscal year.
With respect to the amounts reported in Column (i): In the case of the
Chief Executive Officer, the amount shown in each Fiscal Year includes the
Company's matching contributions pursuant to the 401(k) Plan, payment of
supplemental life insurance premium, payment of golf club membership fees
and Automobile Fringe Benefit (i.e., payment of rental, gas and maintenance
with respect to the personal use of an automobile provided by the Company).
In the case of the Named Executive Officer, the amount shown in each Fiscal
Year includes the Company's matching contributions to its 401(k) Plan,
payment of supplemental life insurance premium and Automobile Fringe
Benefit. In each case, in each Fiscal Year, the Company's 401(k) Plan
provided for a match equal to 50% of a participant's contribution to the
plan in that year, subject to a maximum of (x) 2% of compensation in that
year or (y) applicable Internal Revenue Service limits.
During Fiscal 2001, the Chief Executive Officer and the Named Executive
Officer were granted 50,000 and 40,000 shares, respectively, of the
Company's Common Stock issued pursuant to the Company's 2001 Employee Stock
Plan (the "Stock Plan"). The Stock Plan granted the total 150,000 shares of
the Company's Common Stock to the Company's full-time employees and
director. All 150,000 shares included in the Stock Plan were registered on
March 23, 2001 and issued on March 27, 2001.
Employment Arrangements
All regular employees of the Company including the named executive
officers receive (a) cash compensation (i.e., base salary and discretionary
bonus); (b) retirement related benefits (i.e., the option to participate in
the Company's 401k Plan) and (c) other benefits. Other benefits, which are
available to all regular employees, include medical, dental, vision care and
life insurance and flexible spending accounts. The Company provides all
officers and certain employees with vehicles, supplemental life insurance
and business travel accident insurance. The Company also provides a golf
club membership to the Chief Executive Officer. No employee of the Company
has a written employment agreement with the Company.
B. Outstanding equity awards at fiscal year-end table.
The following table sets forth unexercised options; stock that has not
vested; and equity incentive plan awards for Chief Executive Officer and
Named Executive Officer outstanding as of the end of Fiscal 2007:
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
Option Awards
Name Number of Number of Equity Option Option
securities securities incentive exercise expiration
underlying underlying plan price date
unexercised unexercised awards: ($)
options options number of
exercisable unexercisable securities
(#) (#) underlying
unexercised
unearned
options
(a) (b) (c) (#) (d) (e) (f)
Robert V. Silva 0 0 0 N/A N/A
Andrew J. Mayer, Jr. 0 0 0 N/A N/A
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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
(continued)
Stock Awards
Name Number Market Equity Equity incentive
of Shares value of incentive plan awards:
or units shares or plan awards: market or payout
of stock units of number of value of
that have stock unearned unearned shares,
not vested that have shares, units or
(#) not vested units or other rights
($) other rights that have
that have not vested
not vested ($)
(#)
(g) (h) (i) (j)
Robert V. Silva 0 N/A 0 N/A
Andrew J. Mayer, Jr. 0 N/A 0 N/A
|
No stock option plan of the Company exists under which options may
still be granted or under which options which were granted may still be
exercised, including without limitation, the
Incentive Stock Option Plan of the Company, dated November 8, 1985.
The Company and its subsidiaries have a 401(k) Retirement Savings and
Profit Sharing Plan which covers substantially all full-time employees.
Employees may contribute up to amounts allowable under the Internal Revenue
Code. The Company matches employees' contributions in amounts or
percentages determined by the Company's board of directors. The Company may
also make profit sharing contributions to the plan in amounts determined
annually by the Company. The Company's matching contribution was 50% of an
employee's contribution that is no greater than 2% of their eligible
compensation during 2007 and 2006. The plan provides that the Company's
matching and profit sharing contributions be made in cash.
C. Compensation of Directors
The following table sets forth the compensation of the Company's
directors for Fiscal 2007:
DIRECTOR COMPENSATION
Name Fees Stock Option Nonequity Non- All other Total
earned awards awards incentive qualified compen- $
or paid ($) ($) Plan deferred sation
in cash compen- compen- ($)
($) sation sation
($) earnings
($)
(a) (b) (c) (d) (e) (f) (g) (h)
Arthur C.
Holdsworth, III $10,600 0 0 0 0 0 $10,600
|
Both the Chief Executive Officer and the Named Executive Officer receive
no compensation for their services as directors. Directors of the Company
who are not also employees are paid annual directors' fees of $2,650 per
calendar quarter, plus $750 for attending each meeting of the board. In
Fiscal 2006, Arthur C. Holdsworth, III earned fees of $10,600.
Part III, Item 11. Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters.
As of the close of business on March 24, 2008, the Company has issued
and outstanding 2,979,190 shares of Common Stock, which figure excludes
1,885,750 shares owned by the Company which are not outstanding and are not
eligible to vote.
(A) Set forth below is a table showing, as of March 24, 2008, the number
of shares of Common Stock beneficially owned by each person known by the
Company to be the beneficial owner of more than 5% of the outstanding shares
of such Common Stock.
Unless otherwise specified, the persons named in the table below and
footnotes thereto have the sole right to vote and dispose of their
respective shares, and all such shares are currently owned by all such
persons and not deemed owned by way of the right to acquire shares within
sixty days from options, warrants, rights, conversion privileges or similar
obligations.
Name and Address of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership Class (e)
Roger T. Mahan 365,435 (a),(d) 12.3%
3 Timber Ridge Rd.
Far Hills, NJ 07931
Nancy M. Ernst 321,775 (a),(b),(d) 10.8%
2229 Washington Valley Rd.
Martinsville, NJ 08836
Gary A. Mahan 310,601 (a),(c),(d) 10.4%
53 Cross Road
Basking Ridge, NJ 07920
|
(a) Roger T. Mahan, Nancy M. Ernst and Gary A. Mahan are the children
of Marvin H. Mahan, a former officer and director, and former principal
shareholder of the Company, and his wife, Ingrid T. Mahan. Marvin H. and
Ingrid T. Mahan disclaim beneficial ownership of the shares owned by their
children.
(b) Includes 8,600 shares owned by Nancy M. Ernst's husband, Kenneth A.
Ernst, and 18,200 shares owned by their minor children. Kenneth A. Ernst
was a director of the Company from June 1987 through April 29, 1994.
(c) Includes 8,600 shares owned by Gary A. Mahan's wife, Elizabeth
Mahan, and 8,600 shares owned by their minor child.
(d) Members of the Mahan family, consisting of Roger T. Mahan, Nancy M.
Ernst and Gary A. Mahan, their spouses and children and their parents,
Marvin H. Mahan and Ingrid T. Mahan, own 1,007,911 shares of Common Stock,
which represent approximately 34% of the shares outstanding. In addition,
Ingrid T. Mahan is executrix of the estate of Arthur Tang, which owns an
additional 32,750 shares of such common stock.
(e) From data provided by the Company's Transfer Agent.
(B)Set forth below is a table showing as of March 24, 2008, the number
of shares of Common Stock owned beneficially by each director of the
Company, each executive officer of the Company, and the directors and
executive officers as a group.
Unless otherwise specified, the persons named in the table below and
footnotes thereto have the sole right to vote and dispose of their
respective shares, and all such shares are currently owned by all such
persons and not deemed owned by way of the right to acquire shares within
sixty days from options, warrants, rights, conversion privileges or similar
obligations.
Name and Address of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership Class (e)
Robert V. Silva 73,150 (a) 2.4%
200 Centennial Avenue
Piscataway, NJ 08854
Andrew J. Mayer, Jr. 40,900 (b) 1.5%
200 Centennial Avenue
Piscataway, NJ 08854
Arthur C. Holdsworth, III 23,200 (c) 0.8%
200 Centennial Avenue
Piscataway, NJ 08854
All executive officers 137,250 (d) 5.0%
and directors as a group
(3 in group)
|
(a) Includes 50,000 shares granted pursuant to the Company's 2001
Employee Stock Plan.
(b) Includes 40,000 shares granted pursuant to the Company's 2001
Employee Stock Plan.
(c) Includes 20,000 shares granted pursuant to the Company's 2001
Employee Stock Plan.
(d) Includes 110,000 shares granted to the executive officers and
director pursuant to the Company's 2001 Employee Stock Plan.
(e) From data provided by the Company's Transfer Agent.
No shares set forth in this table are pledged as security.
(C) There are no arrangements of which the Company is aware which may
result in a change of control of the Company.
Securities Authorized for Issuance Under Equity Compensation Plans
The following table sets forth as of December 31, 2007 the number of
shares of the Company's common stock, the Company's only class of equity
securities, issuable upon exercise of outstanding options, warrants and
other rights, the weighted average exercise price of such options, warrants
and other rights and the number of shares of common stock available for
future issuance pursuant to all "equity compensation plans" relating to our
common stock. Equity compensation plans include those approved by our
shareholders, as well as those not approved by our shareholders, including
individual compensation arrangements with one or more of our officers or
directors.
Equity Compensation Plan Information
Plan category Number of securities Weighted-average Number of securities
to be issued upon exercise price of remaining available
exercise of outstanding options for future issuance
outstanding options, warrants and rights
warrants and rights
Equity compensation -0- -0- -0-
plans not approved by
security holders
Equity compensation
plans approved by
security holders 0 0 0
Total 0 0 0
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No stock option plan of the Company exists under which options may
still be granted or under which options which were granted may still be
exercised, including without limitation, the Incentive Stock Option Plan of
the Company, dated November 8, 1985.
Part III, Item 12. Certain Relationships and Related Transactions, and
Director Independence.
As of December 31, 2007 the Company's accounts include a receivable,
created prior to July 2002, of $21,000 for unreimbursed sundry expenses
paid or incurred on behalf of the President and Chairman of the Board, and
his affiliates.
The Company has provided Marvin H. Mahan, a former officer and
director, and former principal shareholder of the Company, and the father
of three of the Company's principal shareholders, dental insurance and fuel
and service for an automobile since his retirement from the Company. Such
expenses totalled approximately $2,000 for each of the years ended December
31, 2007 and 2006.
Corporate Governance
The Company maintains a three-person board of directors. The Company
has determined that Arthur C. Holdsworth, III is an independent director,
as that term is used in Rule 4200(a)(15) of the Rules of National
Association of Securities Dealers.
The board of directors of the Company does not maintain an audit
committee, compensation committee or a nominating committee. Under the
Rules of National Association of Securities Dealers (including its
additional Rules with respect to audit committee independence), if the
Company did have such committees, neither Robert V. Silva nor Andrew J.
Mayer, Jr. would be independent, each being an employee of the Company.
Mr. Holdsworth is the brother-in-law of Mr. Roger Mahan, a controlling
shareholder of the Company. However, the board of directors has determined
that this relationship would not interfere with Mr. Holdsworth's exercise
of independent judgment in carrying out his responsibilities as a director.
Part III, Item 13. Exhibits.
Exhibits
The exhibits to this report are listed in the Exhibit Index on pages
51-54.
Part III, Item 14. Principal Accountant Fees and Services.
The following is a summary of the fees billed to the Company by
WithumSmith+Brown, PC, the Company's independent Registered Public
Accounting Firm, during the fiscal year ended December 31, 2007 and 2006:
Fee Category 2007 2006
Audit Fees $68,100 $66,000
Audit-Related Fees 2,800 -
Tax Fees - -
All Other Fees - 4,347
Total Fees $70,900 $70,347
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Audit Fees. Consists of fees billed for professional services rendered
for the audit of the Company's consolidated financial statements and review
of the interim consolidated financial statements included in quarterly
reports and services that are normally provided by the Company's
independent certified accountants in connection with statutory and
regulatory filings or engagements.
Audit-Related Fees. Consists of fees billed for assurance and related
services that are reasonably related to the performance of the audit or
review of the Company's consolidated financial statements and are not
reported under "Audit Fees." The fees reported for Fiscal 2007 were paid to
the Company's independent certified accountants for their participation in
discussions regarding aspects of the Sarbanes-Oxley Act of 2002. There
were no Audit-Related services provided in Fiscal 2006.
Tax Fees. Consists of fees billed for professional services for tax
compliance, tax advice and tax planning.
All Other Fees. Consists of fees for products and services other than
the services reported above. The fees reported for Fiscal 2006 were paid
to the Company's independent certified accountants for its assistance in
the due diligence conducted by the Company of a candidate for potential
acquisition.
Policy On Audit Committee Pre-Approval Of Audit And Permissible Non-Audit
Services Of Independent Auditors.
The Company has no audit committee. The Board of Directors' policy is
to pre-approve all audit and permissible non-audit services provided by the
independent certified accountants. These services may include audit
services, audit-related services, tax services and other services. Pre-
approval would generally be provided for up to one year and any pre-
approval would be detailed as to the particular service or category of
services, and would be subject to a specific budget. The independent
certified accountants and management are required to periodically report to
the Board of Directors regarding the extent of services provided by the
independent certified accountants in accordance with this pre-approval, and
the fees for the services performed to date. The Board of Directors may
also pre-approve particular services on a case-by-case basis. The Board of
Directors pre-approved all audit services and permitted non-audit services
rendered by the independent certified accountants in 2007 and 2006.
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Dated: March 28, 2008 TRANSTECH INDUSTRIES, INC.
(Registrant)
By:
/s/ Robert V. Silva
Robert V. Silva, President and
Chief Executive Officer and Director
(Principal Executive Officer)
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Pursuant to the Requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
March 28, 2008 /s/ Robert V. Silva
Robert V. Silva, President and
Chief Executive Officer and Director
(Principal Executive Officer)
March 28, 2008 /s/ Andrew J. Mayer, Jr.
Andrew J. Mayer, Jr.
Vice President-Finance, Chief
Financial Officer, Secretary and
Director (Principal Financial and
Accounting Officer)
March 28, 2008 /s/ Arthur C. Holdsworth, III
Arthur C. Holdsworth, III
Director
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TRANSTECH INDUSTRIES, INC.
EXHIBIT INDEX
Sequential
Exhibit No. Page No.
3 Articles of Incorporation and By-Laws:
3 (a) Articles of incorporation: Incorporated by reference to
Exhibit 3 (a) to the Company's Annual Report on Form
10-K for fiscal year ended December 31, 1989.
3 (b) By-laws: Incorporated by reference to Exhibit 3 (b) to
the Company's Annual Report on Form 10-K for fiscal
year ended December 31, 1989.
3 (c) Amended and restated by-laws: See "B" below.
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10 Material contracts:
10 (au) Settlement Agreement approved in September 1995 among
Transtech Industries, Inc., Inmar Associates, Inc.,
Marvin H. Mahan and certain members of the 216 Paterson
Plank Road Cooperating PRP Group: See "A" below.
10 (az) Settlement Agreement for Matters Relating to the Kin-Buc
Landfill dated December 23, 1997 among Transtech
Industries, Inc. and certain of its subsidiaries, Waste
Management, Inc. and certain of its affiliates
including SCA Services, Inc., Inmar Associates, Inc.,
Dock Watch Quarry, Inc., Marvin H. Mahan, Robert J.
Meagher, and Anthony Gaess: See "E" below.
10 (ba) Stipulation of Settlement and Release dated December 23,
1997 among Transtech Industries, Inc. and certain of
its shareholders and former officers, Inmar Associates,
Inc., Tang Realty, Inc., Waste Management, Inc. and
certain of its affiliates including SCA Services, Inc.:
See "E" below.
10(bc)* Transtech Industries, Inc. 2001 Employee Stock Plan:
See "G" below.
10(bd) Agreement of Purchase and Sale dated May 17, 2001 among
Transtech Industries, Inc. (and its subsidiaries
Birchcrest, Inc. and Kinsley's Landfill, Inc.) and BWF
Development, LLC.: See "H" below.
10(be) Confidential Settlement Agreement and Release, dated
October 8, 2001, among certain members of the 216
Paterson Plank Road Cooperating PRP Group, Transtech
Industries, Inc., certain Underwriters at Lloyd's,
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London, and certain London Market Insurance Companies:
See "I" below.
10(bf)* Incentive Stock Option Plan of Transtech Industries, Inc.
dated November 8, 1985: See "J" below.
10(bh) Letter dated July 21, 2004 from the Internal Revenue
Service regarding its acceptance of the Company's Offer
in Compromise: See "L" below.
10(bi) Consent Decree regarding the Kin-Buc Landfill, executed
by Transtech Industries, Inc. on December 30, 2004,
among the US Environmental Protection Agency, US
Department of Justice, Chemical Waste Management, Inc.,
SCA Services of Passaic, Inc., Wastequid, Inc., SC
Holdings, Inc., Waste Management Holdings, Inc., Waste
Management, Inc., Transtech Industries, Inc, Filcrest
Realty, Inc., Kin-Buc, Inc., Inmar Associates, Inc. and
Anthony Gaess: See "M" below.
10(bj) Consent Decree regarding the Kin-Buc Landfill, executed
by Transtech Industries, Inc. on December 30, 2004,
among the New Jersey Department of Environmental
Protection, the New Jersey Spill Compensation Fund,
Chemical Waste Management, Inc., Transtech Industries,
Inc., Filcrest Realty, Inc., Kin-Buc, Inc., Anthony
Gaess, Inmar Associates, Inc., SC Holdings, Inc., Waste
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Management, Inc., and Waste Management Holdings, Inc.:
See "M" below.
10(bk) Second Amendment to the Agreement of Purchase and Sale
dated April 20, 2006 among Transtech Industries, Inc.
(and its subsidiaries Birchcrest, Inc. and Kinsley's
Landfill, Inc.) and BWF Development, LLC: See "N"
below.
10(bl)* Summary of Employee Arrangements for Executive Officers 55
11 Statement regarding computation of net loss 56
per share
13 Annual Report to Stockholders 57 - 125
14 Code of Ethics 126 - 130
21 Subsidiaries of the Registrant 131
31(a) Certification Pursuant to Rules 13a-14(a) and 132 - 133
15d-14(a) of the Securities Exchange Act of 1934 and
Section 302 of the Sarbanes-Oxley Act of 2002 by Chief
Executive Officer
31(b) Certification Pursuant to Rules 13a-14(a) and 134 - 135
15d-14(a) of the Securities Exchange Act of 1934 and
Section 302 of the Sarbanes-Oxley Act of 2002 by Chief
Financial Officer
32(a) Certification Pursuant to 18 U.S.C. Section 136
1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 by Chief Executive Officer
32(b) Certification Pursuant to 18 U.S.C. Section 137
1350,as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 by Chief Financial Officer
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"A" Incorporated herein by reference to the Company's
Quarterly Report on Form 10-QSB for the quarter ended
September 30, 1995.
"B" Incorporated herein by reference to the Company's
Current Report on Form 8-K dated October 24, 1995.
"C" Incorporated herein by reference to the Company's
Current Report on Form 8-K dated March 1, 1996.
"D" Incorporated herein by reference to the Company's
Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1995.
"E" Incorporated herein by reference to the Company's
Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1997.
"F" Incorporated herein by reference to the Company's
Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1998.
"G" Incorporated herein by reference to the Company's
Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2000.
"H" Incorporated herein by reference to the Company's
Current Report on Form 8-K dated May 17, 2001.
"I" Incorporated herein by reference to the Company's
Quarterly Report on Form 10-QSB for the quarter ended
September 30, 2001.
"J" Incorporated herein by reference to the Company's
Form S-8 dated April 3, 1987.
"K" Incorporated herein by reference to the Company's
Current Report on Form 8-K dated April 22, 2004.
"L" Incorporated herein by reference to the Company's
Current Report on Form 8-K dated July 23, 2004.
"M" Incorporated herein by reference to the Company's
Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2004.
"N" Incorporated by reference to the Company's quarterly
report on Form 10-QSB filed for the quarter ended March
31, 2006).
"*" This document is a management contract or
compensatory plan or arrangement.