American Ecology Announces 2002 Operating Profit of $8.9 Million; Restructuring Charges, Discontinued Operations, Accounting Changes Result in Net Income of $18.8 Million.Business Editors BOISE, Idaho--(BUSINESS WIRE)--Feb. 18, 2003 Jim Baumgardner, Senior Vice President and Chief Financial Officer of American Ecology ecology, study of the relationships of organisms to their physical environment and to one another. The study of an individual organism or a single species is termed autecology; the study of groups of organisms is called synecology. Corporation (Nasdaq:ECOL ECOL es.comp.os.linux.* (newsgroups) ECOL Emmanuel Church of Lakewood (San Francisco, CA) ), today announced that for the twelve months ending December 31, 2002, the Company posted operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $8.9 million. This was an increase of $5.8 million, or 187% over the $3.1 million operating income from continuing operations reported in 2001. With adjustments, consolidated net income reached $18.8 million or $1.15 per fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to net income of $802,000 or $.03 per fully diluted share for the year ending December 31, 2001. Reported financial results for the quarter and year ending December 31, 2002 include $7.0 million in charges for discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. at the Company's Oak Ridge, Tennessee Oak Ridge is an incorporated city in Anderson and Roane Counties in East Tennessee, about 25 miles northwest of Knoxville. Oak Ridge's population was 27,387 people at the 2000 census. subsidiary. Fiscal 2002 results also include a one-time $13.1 million gain from adoption of Statement of Financial Accounting Standard ("SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System ") No. 143, and recognition of an $8.3 million tax benefit based on expected future use of net operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. carry forwards. "Continued growth in our core hazardous and radioactive waste radioactive waste, material containing the unusable radioactive byproducts of the scientific, military, and industrial applications of nuclear energy. Since its radioactivity presents a serious health hazard (see radiation sickness), disposing of such material is a disposal business pushed operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. from continuing operations to near record levels in 2002," Baumgardner explained, adding "The December 2002 decision to discontinue dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: our unprofitable low-level radioactive waste Noun 1. low-level radioactive waste - (medicine) radioactive waste consisting of objects that have been briefly exposed to radioactivity (as in certain medical tests) processing operations in Tennessee, take the necessary charges and establish reserves for future costs eliminates a major drag on Verb 1. drag on - last unnecessarily long drag out last, endure - persist for a specified period of time; "The bad weather lasted for three days" 2. future earnings." Fourth Quarter Consolidated revenue from continuing operations for the quarter ending December 31, 2002 increased 11% to $11.7 million over the $10.5 million reported for the same quarter in 2001. This revenue growth was principally driven by higher waste volumes at the Grand View, Idaho Grand View is a city in Owyhee County, Idaho, United States. The population was 470 at the 2000 census. Geography Grand View is located at (42.984803, -116.093277)GR1. disposal facility, which posted a record quarter. "As has been the case throughout 2002, the Idaho site's increasing disposal volumes generated significant earnings for the quarter." Baumgardner explained. During the fourth quarter of 2002, selling, general, and administrative expenses (SG&A) dropped to $4.2 million or 36% of revenue compared to $4.8 million or 46% of revenue in the fourth quarter of 2001. However, the higher revenue and lower direct costs were insufficient to offset litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. expenses in the Ward Valley, California matter and other direct costs in the quarter, causing income from operations in the quarter to dip slightly to $730,000 compared to $943,000 for the same quarter of 2001. A number of major accounting adjustments were taken during the fourth quarter of 2002. The Company recorded $7 million of pre-tax charges following cessation cessation Vox populi The stopping of a thing. See Smoking cessation. of operations at its wholly-owned subsidiary, American Ecology Recycle re·cy·cle tr.v. re·cy·cled, re·cy·cling, re·cy·cles 1. To put or pass through a cycle again, as for further treatment. 2. To start a different cycle in. 3. a. Center, Inc. ("AERC AERC African Economic Research Consortium AERC Adult Education Research Conference AERC American Endurance Ride Conference AERC Alcohol Education and Research Council (UK) AERC Association of European Rarities Committees ") in Oak Ridge, Tennessee. These special pre-tax charges account for the impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of certain assets, an increase in reserves for future closure obligations, and estimated costs to be incurred during 2003 to ready the facility for sale. Oak Ridge Oak Ridge, city (1990 pop. 27,310), Anderson and Roane counties, E Tenn., on Black Oak Ridge and the Clinch River; founded by the U.S. government 1942, inc. as an independent city 1959. financial results have been reclassified as discontinued operations. AERC, which primarily served the commercial nuclear power industry, suspended sus·pend v. sus·pend·ed, sus·pend·ing, sus·pends v.tr. 1. To bar for a period from a privilege, office, or position, usually as a punishment: suspend a student from school. low-level radioactive waste ("LLRW LLRW Low-Level Radioactive Waste ") processing operations in late December 2002. In October 2002, the Company invited bids to purchase AERC and announced its intent to exit the LLRW processing business. After concluding AERC could not be sold as a going concern, management discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: commercial services. This decision resulted in the release of 63 employees. Seventeen employees are presently employed to maintain the facility's radioactive materials radioactive material Radiation A substance that contains unstable–radioactive–atoms that give off radiation as they decay. See Radioactive decay. licenses, remove accumulated ac·cu·mu·late v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates v.tr. To gather or pile up; amass. See Synonyms at gather. v.intr. To mount up; increase. waste and prepare the facility for sale. The Company's municipal solid waste “Municipal waste” redirects here. For other uses, see Municipal waste (disambiguation). Municipal solid waste (MSW) is a waste type that includes predominantly household waste (domestic waste) with sometimes the addition of commercial wastes collected by a landfill near Corpus [Latin, Body, aggregate, or mass.] Corpus might be used to mean a human body, or a body or group of laws. The term is used often in Civil Law to denote a substantial or positive fact, as opposed to one that is ambiguous. Christ, Texas was sold on February 13, 2003 for $10 million in cash plus future royalties. The landfill assets were reclassified as assets held for sale at year-end, and its prior period results of operations were restated and reported as a discontinued operation discontinued operation A segment of a business that has been abandoned or sold or for which plans for one or another of these actions have been approved. See also continuing operations. . Lastly, the Company adjusted the valuation allowance on its deferred tax asset resulting in the recognition of an $8.3 million tax benefit in the quarter. The net result of the Company's continuing operations combined with these unusual events was a loss of $415,000 or $.03 per fully diluted share for the fourth quarter of 2002, compared to net income of $206,000 or $.01 per fully diluted share reported for the same quarter last year. Excluding these unusual events, income before taxes for the three months ending December 31, 2002 was $834,000. "Efforts at Oak Ridge are now focused on safely and expeditiously ex·pe·di·tious adj. Acting or done with speed and efficiency. See Synonyms at fast1. ex removing accumulated waste while maintaining our existing licenses and seeking a qualified buyer," stated President and Chief Executive Officer Stephen Romano. 12 Months 2002 For 2002, consolidated revenue from presently continuing operations increased 16% to $46.8 million in 2002, up from $40.2 million in 2001. Revenue growth was driven by higher waste volumes at the Company's Idaho and Texas hazardous waste Hazardous waste Any solid, liquid, or gaseous waste materials that, if improperly managed or disposed of, may pose substantial hazards to human health and the environment. Every industrial country in the world has had problems with managing hazardous wastes. facilities and at its Washington radioactive waste facility. Gross profit from continuing operations increased to $21.6 million or 46% of revenue, up from $17.4 million or 43% in revenue in 2001. In 2002, SG&A from continuing operations dropped by 12% to $12.6 million compared to $14.3 million in 2001. Relative to revenue, SG&A showed an even greater improvement, dropping to 27% of revenue compared to 36% of revenue last year. The combination of higher revenue, improved gross profit, and lower expenses pushed income from continuing operations for the year ending December 31, 2002 to $8.9 million from the $3.1 million posted during 2001. The $13.1 million non-cash gain from the change in accounting standard, recognition of an $8.3 million tax benefit, and $8.9 million in operating income offset more than $3 million in operating losses at AERC and $7 million in special charges related to the discontinuation dis·con·tin·u·a·tion n. A cessation; a discontinuance. Noun 1. discontinuation - the act of discontinuing or breaking off; an interruption (temporary or permanent) discontinuance of AERC operations. This allowed the Company to post net income of $18.8 million or $1.15 per fully diluted share for the year ending December 31, 2002. This compared to net income of $802,000 or $.03 per fully diluted share for 2001. Excluding the impact of discontinued Oak Ridge operations and the above accounting standard change, the Company posted net income from continuing operations of $16.1 million or $.98 per fully diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of , more than a five fold increase from the $3 million net income from continuing operations or $.17 per fully diluted share posted in 2001. "Our financial plan going into 2002 was to deliver solid earnings, strengthen our balance sheet, improve cash flow, and either achieve profitability at Oak Ridge or exit that business," Baumgardner explained, adding "We delivered on all points." "With numerous lawsuits settled, a substantial reorganization behind us and a major drag on earnings eliminated, American Ecology is now solidly focused on growing its core hazardous and radioactive waste disposal business," Romano concluded. Changes in Accounting and Special Notes Consistent with SFAS No. 109 "Accounting for Income Taxes," the Company records a valuation allowance to reduce its deferred tax assets to the amount management believes will more likely than not be realized. At year end, the Company adjusted its deferred tax valuation allowance, recognizing an $8.3 million tax benefit in its income statement while posting a deferred tax asset of an equal amount on its balance sheet. The Company considered future business growth, future taxable income Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity's tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. , the mix of earnings in the markets in which it operates, and prudent and feasible tax planning Tax planning Devising strategies throughout the year in order to minimize tax liability, for example, by choosing a tax filing status that is most beneficial to the taxpayer. strategies in adjusting the valuation allowance. Estimates to remove accumulated waste and prepare the Oak Ridge, Tennessee subsidiary for sale following cessation of operations resulted in a charge of approximately $1.8 million for these expected future costs, which are included in the $7 million of special charges for AERC. These costs were accounted for consistent with guidance in Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity" and have been included as a charge to the results of discontinued operations for the year ended December 31, 2002. In addition, the Company adopted SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." This standard requires, among other things, that assets held for sale or where the Company has no continuing involvement be classified as discontinued operations in the statements of operations for all periods presented. Accordingly, the Company reclassified historical operating results as necessary to comply with SFAS No. 144. This standard further requires that impairment tests be performed on assets held for sale. At December 31, 2002 the Company impaired $1.6 million of AERC's long term assets and $360,000 of its short term assets. These charges are also part of AERC's $7 million special charges. Conference Call The Company's fourth quarter and 2002 investor conference call will be held Thursday, February 20, 2002 at 10:00 am Mountain Time. Interested parties are invited to submit questions in advance to info@americanecology.com, or by facsimile at 208-331-7900. To join the call, dial 1-877-679-9055. Participants will be asked to provide their name and affiliation prior to joining the call. American Ecology Corporation, through its subsidiaries, provides radioactive, PCB PCB: see polychlorinated biphenyl. PCB in full polychlorinated biphenyl Any of a class of highly stable organic compounds prepared by the reaction of chlorine with biphenyl, a two-ring compound. , hazardous, and non-hazardous waste services to commercial and government customers throughout the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , such as nuclear power plants, steel mills, medical and academic institutions and petro-chemical facilities. Headquartered in Boise, Idaho “Boise” redirects here. For other uses, see Boise (disambiguation). Boise is the capital and most populous city of the U.S. state of Idaho. It is the county seat of Ada County and the principal city of the Boise metropolitan area. , the Company is the oldest radioactive and hazardous waste services company in the United States. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that are based on management's current expectations, beliefs, and assumptions about the industry and markets in which American Ecology Corporation and its subsidiaries operate. Actual results may differ materially from what is expressed herein. No assurance can be given that the company can successfully implement its growth strategy, generate improved or sustained earnings, or prevail in pending litigation including litigation to recover monetary damages Monetary damages, in civil law, refers to compensation given to an injured party by a liable party. Monetary damages may be restitution, a penalty, or both. for the proposed Ward Valley, California and Butte, Nebraska Butte is a village in Boyd County, Nebraska, United States. The population was 366 at the 2000 census. It is the county seat of Boyd CountyGR6. Geography Butte is located at (42.911549, -98. LLRW disposal projects. Nor can any assurance be given that Company's cost estimates to exit its Tennessee LLRW processing business are accurate or complete. Costs to exit that business could materially exceed current estimates. No assurance can be given that the Company can generate taxable income in the future. If it is determined that the Company will not realize all or part of its net deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to earnings in future periods. Likewise, if it is later determined that it is more likely than not that the Company will utilize the remaining, presently unrecognized tax benefits, additional tax benefits will be recognized. For information on factors that could cause actual results to differ from expectations, please refer to American Ecology Corporation's Annual Report 10-K and Quarterly Reports 10-Q filed with the Securities and Exchange Commission.
AMERICAN ECOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
($ in 000's except per share amounts)
Three Months Year Ended
Ended Dec. 31 Dec. 31,
--------------------------------
2002 2001 2002 2001
--------------------------------
Revenue $11,712 $10,476 $46,789 $40,175
Direct operating costs 6,790 4,691 25,223 22,778
--------------------------------
Gross profit 4,922 5,785 21,566 17,397
Selling, general and administrative
expenses 4,192 4,842 12,631 14,274
--------------------------------
Income from operations 730 943 8,935 3,123
Investment income -- 14 31 246
Gain/(loss) on sale of assets (15) (30) (15) (8)
Interest expense 94 194 820 1,011
Other income (expense) (252) (162) (542) 827
--------------------------------
Income before income tax, discontinued
operations and cumulative effect of
change in accounting principle 369 571 7,589 3,177
Income tax benefit (expense) 8,279 (118) 8,505 (186)
--------------------------------
Income before discontinued operations
and cumulative effect of change in
accounting principle 8,648 453 16,094 2,991
(Loss) from discontinued operations (9,063) (247)(10,464) (2,189)
--------------------------------
Income (loss) before cumulative effect
of change in accounting principle (415) 206 5,630 802
Cumulative effect of change in
accounting principle -- -- 13,141 --
--------------------------------
Net income (loss) (415) 206 18,771 802
Preferred stock dividends 99 99 398 398
--------------------------------
Net income (loss) available to common
shareholders $(514) $107 $18,373 $404
================================
Basic earnings (loss) per share $(.03) $.01 $1.28 $.03
================================
Diluted earnings (loss) per share $(.03) $.01 $1.15 $.03
================================
Dividends paid per common share $-- $-- $-- $--
================================
Notes are an integral part of the financial statements. Certain
reclassifications have been made to prior year financial statements to
conform to current year presentation.
AMERICAN ECOLOGY CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
($ in 000's except per share amounts)
As of December 31,
2002 2001
--------------------
ASSETS
Current Assets:
Cash and cash equivalents $135 $4,476
Receivables, net 10,460 12,674
Income taxes receivable 740 740
Prepayments and other 498 1,881
Deferred income taxes 2,745 --
Assets held for sale or closure 10,722 --
--------------------
Total current assets 25,300 19,771
Cash and investment securities, pledged 244 243
Property and equipment, net 26,998 38,462
Facility development costs 27,430 27,430
Other assets 129 918
Assets held for sale or closure 1,485 --
Deferred income taxes 5,539 --
--------------------
Total Assets $87,125 $86,824
====================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long term debt $1,985 $9,860
Short term line of credit -- 5,000
Accounts payable 2,192 2,408
Accrued liabilities 4,166 12,121
Accrued closure and post closure obligation,
current portion 882 700
Income taxes payable 23 250
Current liabilities of assets held for sale or
closure 7,965 --
--------------------
Total current liabilities 17,213 30,339
Long term accrued liabilities 2,372 1,843
Long term debt 5,972 2,593
Revolving line of credit 603 --
Liabilities of assets held for sale or closure,
excluding current portion 5,699 --
Accrued closure and post closure obligation,
excluding current portion 9,318 25,633
--------------------
Total liabilities 41,177 60,408
--------------------
Commitments and contingencies
Shareholders' equity:
Convertible preferred stock, 1,000,000 shares
authorized,
Designated as follows:
Series D cumulative convertible preferred
stock, $.01 par value,
100,001 shares issued and outstanding; 1 1
Series E redeemable convertible preferred
stock, $10.00 par value,
300,000 shares converted and retired -- --
Common stock, $.01 par value, 50,000,000
authorized, 14,539,264
and 13,766,485 shares issued and outstanding 145 138
Additional paid-in capital 55,789 54,637
Accumulated deficit (9,987) (28,360)
--------------------
Total shareholders' equity 45,948 26,416
--------------------
Total Liabilities and Shareholders' Equity $87,125 $86,824
====================
Notes are an integral part of the financial statements. Certain
reclassifications have been made to prior year financial statements to
conform to current year presentation.
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