American Ecology Posts $2.0 Million 2nd Quarter Profit; Core Disposal Business Drives Earnings.Business Editors BOISE, Idaho--(BUSINESS WIRE)--July 28, 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 financial results for the three and six months ending June 30, 2003. For the quarter ended June 30, 2003, the Company reported net income of $2.0 million or $0.11 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 $2.1 million or $0.12 per diluted share for the quarter ending June 30, 2002. Income 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 for the second quarter reached $2.7 million, exceeding income from continuing operations of $2.6 million for the same period last year. Revenue from continuing operations reached $12 million during the second quarter 2003, a 13% increase over the $10.6 million reported for the same quarter last year. Steady revenue growth at the Company's 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 and a strong quarter at its Richland, Washington Richland is a city in Benton County in southeastern Washington, at the confluence of the Yakima River and the Columbia River. As of the 2000 census, the city population was 38,708, with a 2005 population estimate of 43,520. disposal facility accounted for the increase. Revenue from continuing operations for the first six months of 2003 reached $22.8 million compared to $24.0 million for the first six months of 2002. Slightly lower year-to-date revenue reflects a large event project handled by the Richland site in the first quarter last year, which was not replaced in the first six months of 2003. "The Company's strong second quarter financial performance demonstrates the earnings strength of our Idaho and Washington facilities," Baumgardner noted, adding "The Grand View, Idaho site continued to increase niche business disposal volumes despite a generally weak economy and highly competitive conditions in the nation's traditional 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. disposal market." For the first half of 2003, the Company reported a net loss of $15.2 million or ($0.94) per fully diluted share, compared to net income of $17.9 million or $1.14 per diluted share for the same period last year. A series of large one-time events in the first half of both years drove this large swing in reported earnings. In the first half of 2002, the Company recognized a cumulative effect gain of $13.1 million in implementing 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, a new accounting standard governing gov·ern v. gov·erned, gov·ern·ing, gov·erns v.tr. 1. To make and administer the public policy and affairs of; exercise sovereign authority in. 2. disposal site closure obligations, and also recognized revenue and earnings from the previously mentioned Richland event project. In the first half of 2003, the Company wrote off $21 million following an adverse trial court ruling in its Ward Valley damages claim, expensed $1.8 million in legal fees associated with Ward Valley 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. , posted a $5 million gain from the sale of its former El Centro El Centro (ĕl sĕn`trō), city (1990 pop. 31,384), seat of Imperial co., SE Calif., near the Mexican border; inc. 1908. It is a processing and shipping center for a heavily irrigated agricultural region (vegetables, grain, cotton, municipal waste landfill, and expensed an additional $2 million 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. in 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. . Selling, general & administrative expenses (SG&A) for the second quarter increased to $3.3 million, or 27% of revenue compared to $2.2 million, or 20% of revenue in the same quarter last year. This increase primarily reflects $300,000 in Ward Valley litigation costs in Q2 2003 and a series of unusual reductions or credits to SG&A in Q2 of 2002, including recovery of previously paid legal fees, a franchise tax refund Tax refund Money back from the government when too much tax has been paid or withheld from a salary. , and reversals of accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. for legal matters. For the six months ending June 30, 2003, SG&A was $7.8 million or $2.0 million higher than the same period in 2002. Unreserved expenses to remove and dispose of dis·pose v. dis·posed, dis·pos·ing, dis·pos·es v.tr. 1. To place or set in a particular order; arrange. 2. remaining customer waste and prepare the 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. facility for sale reduced second quarter 2003 earnings by $692,000. However, by July 21, 2003, all customer waste had been safely removed from the site. During the second quarter, the Company entered into a non-binding letter of intent with a prospective buyer who is actively undertaking due diligence Research; analysis; your homework. This term has caught on in all industries, because it sounds so "wired." Who would want to do analysis or research when they can do due diligence. See wired. to acquire the facility. The buyer's assessment is taking place in conjunction with radiation surveys and clean-up work following removal of customer waste. The second quarter Oak Ridge charges also include amounts for incidental Contingent upon or pertaining to something that is more important; that which is necessary, appertaining to, or depending upon another known as the principal. Under Workers' Compensation statutes, a risk is deemed incidental to employment when it is related to whatever a waste generated at the site. "While the actual cost to remove and dispose of previously 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. customer wastes at the Oak Ridge plant proved higher than initially estimated, we are pleased that this inherently uncertain and difficult task is now behind us," President and Chief Executive Officer Stephen Romano stated, adding "We are now actively engaged in due diligence with a prospective buyer." In July 2003, the Company was notified by representatives of the Paper Allied Industrial Chemical and Energy Workers International Union (PACE), AFL-CIO AFL-CIO: see American Federation of Labor and Congress of Industrial Organizations. AFL-CIO in full American Federation of Labor-Congress of Industrial Organizations U.S. previously employed at the Oak Ridge, Tennessee plant that the union would accept the last settlement offer made by the Company to resolve all matters between the union and the Company, although no definitive agreement has been executed to date. If executed, the final settlement would be $151,000, which will be recognized when signed consistent with applicable accounting standards. In other developments, on June 26, 2003, the Company appealed the adverse March 26, 2003, trial court decision denying its 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. claim against the State of California. This claim stems from California's abandonment of the Ward Valley 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) disposal project. The Company announced today that the law firm of Cooley Godward LLP LLP - Lower Layer Protocol is undertaking its appeal on a fixed fee plus contingency contingency n. an event that might not occur. basis. The Company also today disclosed that it had entered into an amendment to the Ward Valley Interest Agreement and Assignment with its previous lender reallocating any proceeds secured through the Ward Valley litigation. Under terms of the recent agreement, any recovered funds shall first be allocated to reimburse re·im·burse tr.v. re·im·bursed, re·im·burs·ing, re·im·burs·es 1. To repay (money spent); refund. 2. To pay back or compensate (another party) for money spent or losses incurred. the Company for past and future legal expenses incurred in the pending litigation, including any contingency fee contingency fee Law & medicine An attorney fee based on a percentage of the money recovered in a lawsuit payments. Any remaining monetary recovery would be divided equally between the Company and the Bank. The Company also announced today that on July 2, 2003, the U.S. Court of Appeals for the Federal Circuit dismissed the plaintiff's appeal in Frank Manchak Jr. v. US Ecology, Inc., a patent infringement patent infringement n. the manufacture and/or use of an invention or improvement for which someone else owns a patent issued by the government, without obtaining permission of the owner of the patent by contract, license or waiver. case brought against the Company's Nevada site in 1996. Dismissal of Manchak's appeal followed an October 2002 federal district court ruling granting the Company's summary judgment motion to dismiss the case. "Our continued progress to resolve outstanding litigation, exit unprofitable businesses and reduce liabilities is allowing the Company to focus on its core waste disposal operations," Romano commented, concluding, "We expect earnings from continuing operations for the second half of 2003 to exceed first half." American Ecology Corporation, through its subsidiaries, provides radioactive ra·di·o·ac·tive adj. Of or exhibiting radioactivity. radioactive characterized by radioactivity. radioactive decay , 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 our 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 and no assurance can be given that the Company can successfully implement its growth strategy, generate improved earnings, exit or sell its Oak Ridge facility without incurring additional unreserved costs, or prevail in pending litigation. For information on other factors that could cause actual results to differ from expectations, please refer to American Ecology Corporation's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and Quarterly Reports on Form 10-Q Form 10-Q See 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 Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
--------- --------- --------- ---------
(Restated) (Restated)
Revenue $ 12,020 $ 10,605 $ 22,791 $ 24,029
Direct operating costs 6,056 5,841 12,040 12,016
--------- --------- --------- ---------
Gross profit 5,964 4,764 10,751 12,013
Selling, general and
administrative expenses 3,289 2,207 7,786 5,748
--------- --------- --------- ---------
Income from operations 2,675 2,557 2,965 6,265
Investment income 22 16 22 27
Interest expense 38 243 159 508
Loss on write off of Ward
Valley facility development
costs -- -- 20,951 --
Other income (loss) 93 140 93 (325)
--------- --------- --------- ---------
Net income (loss) before
income tax, discontinued
operations, and cumulative
effect of change in
accounting principal 2,752 2,470 (18,030) 5,459
Income tax expense 63 -- 55 --
--------- --------- --------- ---------
Net income (loss) before
discontinued operations and
cumulative effect of change
in accounting principal 2,689 2,470 (18,085) 5,459
Gain from discontinued
operations - El Centro
Landfill 16 34 4,960 224
(Loss) from discontinued
operations - Oak Ridge LLRW
Facility (692) (303) (2,029) (704)
--------- --------- --------- ---------
Net Income (loss) before
cumulative effect of change
in accounting principle 2,013 2,201 (15,154) 4,979
Cumulative effect of change
in accounting principle -- -- -- 13,141
--------- --------- --------- ---------
Net income (loss) 2,013 2,201 (15,154) 18,120
Preferred stock dividends -- 99 64 197
--------- --------- --------- ---------
Net income (loss) available
to common shareholders $ 2,013 $ 2,102 $ (15,218)$ 17,923
========= ========= ========= =========
Basic earnings (loss) from
continuing operations .16 .16 (1.12) .37
Basic earnings (loss) from
discontinued operations (.04) (.02) .18 (.03)
Basic earnings from
cumulative effect of
accounting change -- -- -- .93
--------- --------- --------- ---------
Basic earnings (loss) per
share $ .12 $ .14 $ (.94)$ 1.27
========= ========= ========= =========
Diluted earnings (loss) from
continuing operations .15 .14 (1.12) .33
Diluted earnings (loss) from
discontinued operations (.04) (.02) .18 (.03)
Diluted earnings from
cumulative effect of
accounting change -- -- -- .84
--------- --------- --------- ---------
Diluted earnings (loss) per
share $ .11 $ .12 $ (.94)$ 1.14
========= ========= ========= =========
Dividends paid per common
share $ -- $ -- $ -- $ --
========= ========= ========= =========
Note: Certain reclassifications of prior quarter and previous
year-to-date amounts have been made to conform to current quarter and
year-to-date presentation, none of which affect previously reported
net income.
AMERICAN ECOLOGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
($ in 000's except per share amounts)
June 30, December 31,
2003 2002
------------ ------------
ASSETS
Current Assets:
Cash and cash equivalents $ 4,750 $ 135
Receivables, net 9,167 10,460
Income taxes receivable 740 740
Prepayments and other 659 498
Deferred income taxes -- 2,745
Assets held for sale or closure 4,068 10,722
----------- -----------
Total current assets 19,384 25,300
Cash and investment securities, pledged 244 244
Property and equipment, net 27,434 26,998
Facility development costs 6,478 27,430
Deferred income taxes 8,284 5,539
Other assets 59 129
Assets held for sale or closure 2,239 1,485
----------- -----------
Total Assets $ 64,122 $ 87,125
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long term debt $ 1,455 $ 1,985
Accounts payable 2,697 2,192
Accrued liabilities 3,722 4,166
Accrued closure and post closure
obligation, current portion 882 882
Income taxes payable 19 23
Current liabilities of assets held for
sale or closure 5,322 7,965
----------- -----------
Total current liabilities 14,097 17,213
Revolving line of credit -- 603
Long term accrued liabilities 521 2,372
Long term debt 4,810 5,972
Accrued closure and post closure
obligation, excluding current portion 9,479 9,318
Liabilities of assets held for sale or
closure, excluding current portion 5,571 5,699
----------- -----------
Total liabilities 34,478 41,177
----------- -----------
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,
0 and 100,001 shares issued and
outstanding; -- 1
Common stock, $.01 par value, 50,000,000
authorized, 16,965,748
and 14,539,264 shares issued and
outstanding 170 145
Additional paid-in capital 54,679 55,789
Accumulated deficit (25,205) (9,987)
----------- -----------
Total shareholders' equity 29,644 45,948
----------- -----------
Total Liabilities and Shareholders' Equity $ 64,122 $ 87,125
=========== ===========
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