SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002
COMMISSION FILE NUMBER 0-11688
A. American Ecology Corporation 401(k) Savings and Retirement Plan and Trust
B. American Ecology Corporation
300 East Mallard, Suite 300
Boise, Idaho 83706
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
AMERICAN ECOLOGY CORPORATION 401(K) SAVINGS AND RETIREMENT PLAN AND TRUST
Date: 6/30/2003 /s/ James R. Baumgardner
--------------- ------------------------
James R. Baumgardner
As Trustee for the Plan
AMERICAN ECOLOGY CORPORATION
401(K) SAVINGS AND RETIREMENT PLAN
AND TRUST
INDEPENDENT AUDITOR'S REPORT
AND
FINANCIAL STATEMENTS
WITH
SUPPLEMENTAL INFORMATION
DECEMBER 31, 2002 AND 2001
CONTENTS
INDEPENDENT AUDITOR'S REPORT 1
FINANCIAL STATEMENTS
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS 2
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS 3
NOTES TO FINANCIAL STATEMENTS 4-8
SUPPLEMENTAL INFORMATION
SCHEDULE H, LINE 4I - SCHEDULE OF ASSETS (HELD AT END OF YEAR) 9-10
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INDEPENDENT AUDITOR'S REPORT
To the Trustees
American Ecology Corporation 401(k) Savings and Retirement Plan and Trust
We have audited the accompanying statement of net assets available for benefits
of American Ecology Corporation 401(k) Savings and Retirement Plan and Trust as
of December 31, 2002 and 2001 and the related statement of changes in net assets
available for benefits for the year ended December 31, 2002. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of American Ecology
Corporation 401(k) Savings and Retirement Plan and Trust as of December 31, 2002
and 2001 and the changes in its net assets available for benefits for the year
ended December 31, 2002 in conformity with accounting principles generally
accepted in the United States of America.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental schedule on pages 9 and 10 is
presented for the purpose of additional analysis and is not a required part of
the basic financial statements but is supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. This supplemental schedule
is the responsibility of the Plan's management. The supplemental schedule has
been subjected to the auditing procedures applied in the audit of the basic
financial statements for the year ending December 31, 2002 and, in our opinion,
is fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
Seattle, Washington
June 18, 2003
1
AMERICAN ECOLOGY CORPORATION 401(k) SAVINGS
AND RETIREMENT PLAN AND TRUST
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2002 AND 2001
--------------------------------------------------------------------------------
2002 2001
---------- ----------
ASSETS
Investments, at fair value
Pooled separate accounts $7,547,611 $8,570,992
Common Stock of American Ecology Corporation 205,302 161,008
Participant loans 375,680 385,404
Investments, at contract value 158,863 139,572
Receivables
Employer match contribution 28 -
---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $8,287,484 $9,256,976
========== ==========
See accompanying notes. 2
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AMERICAN ECOLOGY CORPORATION 401(k) SAVINGS
AND RETIREMENT PLAN AND TRUST
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 2002
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ADDITIONS
Investment income
Net appreciation in fair value of common stock $ 79,764
Interest 30,752
-------------------
110,516
-------------------
Contributions
Employer 241,623
Employee 529,150
Rollovers 20,673
Employer contribution to union employees (see Note 1) 294,481
-------------------
1,085,927
-------------------
Total additions 1,196,443
-------------------
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO
Net depreciation in fair value of pooled separate accounts 1,208,829
Benefits paid to participants 927,386
Administrative expenses 29,720
-------------------
Total deductions 2,165,935
-------------------
NET DECREASE IN ASSETS AVAILABLE FOR BENEFITS (969,492)
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of year 9,256,976
-------------------
End of year $ 8,287,484
===================
See accompanying notes. 3
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AMERICAN ECOLOGY CORPORATION 401(k) SAVINGS
AND RETIREMENT PLAN AND TRUST
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
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NOTE 1 - DESCRIPTION OF PLAN
The following brief description of the American Ecology Corporation 401(k)
Savings and Retirement Plan and Trust (the Plan) is provided for general
information purposes only. Participants should refer to the Plan document
for complete information regarding the Plan's definitions, benefits,
eligibility, and other matters.
GENERAL - The Plan is a defined contribution plan covering all employees of
American Ecology Corporation and its subsidiaries (the Company) who have
one year of service and are age eighteen or older. A year of service is
defined as a 12-consecutive month period in which an employee completes at
least 1,000 hours of service. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA).
Effective January 1, 2003, all employees of the Company who have 90 days of
service and are age eighteen or older are eligible to participate in the
Plan.
CONTRIBUTIONS - Each year, participants may defer up to 100 percent of
their compensation as defined by the Plan, up to the maximum deferrable
amount allowed by the Internal Revenue Service. Participants may elect to
deposit their contributions in any of the investment options available.
Participants may also contribute amounts representing distributions from
other qualified plans. Participants direct the investment of their
contributions into various investment options offered by the Plan. The
Company contributes a discretionary matching contribution, which is
determined by the Employer. For 2002 and 2001, the Company established the
discretionary matching contribution for all participants equal to 55
percent of the amount of compensation deferred by each participant for the
calendar year not exceeding 6 percent of compensation. In 2002, the Plan
contributed $294,481 of back pay to members of the Oil, Chemical and Atomic
Workers Union as part of a stipulation enforced by the National Labor
Relations Board.
PARTICIPANT ACCOUNTS - Each participant's account is credited with the
participant's elective deferral, the Company's matching contribution and an
allocation of Plan earnings and charged with an allocation of
administrative expenses. Allocations are based on participant earnings or
account balances as defined. Forfeitures of terminated participant's
nonvested benefits are applied to reduce the Company's future contributions
to the Plan.
4
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AMERICAN ECOLOGY CORPORATION 401(k) SAVINGS
AND RETIREMENT PLAN AND TRUST
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
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NOTE 1 - DESCRIPTION OF PLAN (Continued)
VESTING - The vesting schedule is as follows on Company matching
contributions and actual earnings thereon:
Percentage of
Service Vested Interest
------- ---------------
1 year 20%
2 years 60%
3 years 100%
The Plan provides for participants to be 100% vested upon death, permanent
disability or the attainment of age 65.
PARTICIPANT LOAN - Participants may borrow from their fund accounts a
minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of
their account balance. The term of the loan will not exceed 5 years except
in the case of a loan for the purpose of acquiring a primary residence. The
term of the loan will be determined by the Administrator at the time the
loan is made. The loans are secured by the balance in the participant's
account and bear interest at a rate commensurate with local prevailing
rates as determined by the Plan administrator. Interest rates range from
5.0% to 9.5%. Principal and interest is paid ratably through bi-weekly
payroll deductions.
PAYMENT OF BENEFITS - Upon normal retirement or death, vested benefits due
to participants and their beneficiaries may be paid in the form of either a
lump-sum distribution or fixed period annuities.
FORFEITED ACCOUNTS - At December 31, 2002, forfeited nonvested accounts
totaled $8,610. This amount will be used to reduce future employer
contributions.
RISK - Investment securities are exposed to various risks, such as interest
rate, market, and credit risk. It is reasonably possible, given the level
of risk associated with investment securities that changes in the near term
could materially affect the investment amounts reported in the financial
statements.
5
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AMERICAN ECOLOGY CORPORATION 401(k) SAVINGS
AND RETIREMENT PLAN AND TRUST
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
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NOTE 2 - SUMMARY OF ACCOUNTING POLICIES
USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires the plan
administrator to make estimates and assumptions that affect certain
reported amounts and disclosures. Accordingly, actual results may differ
from those estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION - The Plan's investments are
stated at fair value except for its benefit-responsive investment
contracts, which are valued at contract value (see Note 3). All other
investments are carried at their fair value measured by quoted market
prices.
Purchases and sales of securities are recorded on a trade-date basis.
Dividends are recorded on the ex-dividend date. Investment income is
recorded as earned.
PAYMENT OF BENEFITS - Benefits are recorded when paid.
NOTE 3 - GUARANTEED INTEREST ACCOUNTS
The fair value of the guaranteed interest accounts held by the Plan is as
follows at December 31:
2002 2001
------- ------
Guaranteed interest accountwith interest at rates of
4.10% to 4.45% as of December 31, 2001, maturing on
December 31, 2001.
$ - $55,590
Guaranteed interest account with interest at rates
6.50% to 6.90% as of December 31, 2002 and 4.10% as of
December 31, 2001, maturing on December 31, 2002. 27,653 26,539
Guaranteed interest account with interest at rates
4.10% to 6.10% at December 31, 2002 and 4.10% to
4.45% as of December 31, 2001, maturing on December 31, 2003. 39,518 37,871
Guaranteed interest accountwith interest at rates of
3.63% to 4.35% as of December31, 2002, maturing on
December 31, 2004. 89,077 -
6
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AMERICAN ECOLOGY CORPORATION 401(k) SAVINGS
AND RETIREMENT PLAN AND TRUST
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
--------------------------------------------------------------------------------
NOTE 3 - GUARANTEED INTEREST ACCOUNTS (Continued)
2002 2001
------ -------
Guaranteed interest account with interest at rates of
2.90% to 5.80% as of December 31, 2002 and 4.45% to
5.10% as of December 31, 2001, maturing on December 31,2005. $1,389 $17,176
Guaranteed interest account with interest at rates of
6.05% to 6.11% as of December 31, 2002 and 5.10% as of
December 31, 2001, maturing on December 31, 2006. 1,072 985
Guaranteed interest account with interest at rates of
5.41% to 5.71% as of December 31, 2002 and 5.10% as of
December 31, 2001, maturing on December 31, 2007. 846 771
Guaranteed interest account with interest at rates of
5.15% to 6.01% as of December 31, 2002 and 5.10% as of
December 31, 2001, maturing on December 31, 2008. 215 194
Guaranteed interest account with interest at rates of
6.99% to 7.00% as of December 31, 2002 and 5.10% as of
December 31, 2001, maturing on December 31, 2009. 250 225
Guaranteed interest account with interest at rates of
5.78% as of December 31, 2002 and 5.1% as
December 31, 2001, maturing on December 31, 2010. 248 221
Guaranteed interest account with interest at rates of
4.98% to 5.55% as of December 31, 2002, maturing on
December 31, 2011. 509 -
Guaranteed interest account with interest at rates of 4.2% as
of December 31, 2002, maturing on December 31, 2012. 14 -
7
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AMERICAN ECOLOGY CORPORATION 401(k) SAVINGS
AND RETIREMENT PLAN AND TRUST
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
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NOTE 4 - INVESTMENTS
The following presents investments that represent 5 percent or more of the
Plan's net assets:
2002 2001
---------- ----------
Manulife Lifestyle Balanced $ 663,635 $ 680,306
Manulife Lifestyle Growth 1,190,640 1,338,787
Manulife Money Market 776,947 746,874
Fidelity Advisor Contrafund - 491,290
T. Rowe Price Science and Technology - 466,202
Manulife Lifestyle Conservative 580,968 -
NOTE 5 - PARTY-IN-INTEREST TRANSACTIONS
Certain Plan investments include pooled separate accounts and guaranteed
investment contracts that are managed by Manulife Financial and, therefore,
these transactions qualify as party-in-interest transactions.
The Plan invests in company stock.
NOTE 6 - PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of Plan
termination, participants would become 100 percent vested in their employer
contributions.
NOTE 7 - INCOME TAX STATUS
The Plan obtained its latest determination letter on April 9, 2001 in which
the Internal Revenue Service stated that the original Plan and all
amendments through December 11, 2000, were in compliance with the
applicable requirements of the Internal Revenue Code (IRC). The Plan has
been amended since receiving the determination letter. However, the Plan
administrator believes the Plan as currently designed is being operated in
compliance with the applicable requirements of the IRC.
8
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SUPPLEMENTAL INFORMATION
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AMERICAN ECOLOGY CORPORATION 401(k) SAVINGS
AND RETIREMENT PLAN AND TRUST
EIN: 95-3889638
PLAN NUMBER: 003
DECEMBER 31, 2002
--------------------------------------------------------------------------------
SCHEDULE H, LINE 4I - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
(e)
(b) (c) (d) Current
(a) Identity of issue Description Cost value
---- ---------------------------------------- --------------------------------- ---- ----------
* Manulife Lifestyle - Conservative Pooled Separate Account ** $ 580,968
* Manulife Lifestyle - Moderate Pooled Separate Account ** 38,543
* Manulife Lifestyle - Balanced Pooled Separate Account ** 663,635
* Manulife Lifestyle - Growth Pooled Separate Account ** 1,190,640
* Manulife Lifestyle - Aggressive Pooled Separate Account ** 280,406
* Manulife Guaranteed Interest Accounts Maturing 12/31/02, 6.50% to 6.90% ** 27,653
* Manulife Guaranteed Interest Accounts Maturing 12/31/03, 4.10% to 6.10% ** 38,838
* Manulife Guaranteed Interest Accounts Maturing 12/31/04, 3.63% to 4.35% ** 87,986
* Manulife Guaranteed Interest Accounts Maturing 12/31/05, 2.90% to 5.80% ** 1,406
* Manulife Guaranteed Interest Accounts Maturing 12/31/06, 6.05% to 6.11% ** 1,018
* Manulife Guaranteed Interest Accounts Maturing 12/31/07, 5.41% to 5.71% ** 817
* Manulife Guaranteed Interest Accounts Maturing 12/31/08, 5.15% to 6.01% ** 200
* Manulife Guaranteed Interest Accounts Maturing 12/31/09, 6.99% to 7.00% ** 217
* Manulife Guaranteed Interest Accounts Maturing 12/31/10, 5.78% ** 229
* Manulife Guaranteed Interest Accounts Maturing 12/31/11, 4.98% to 5.55% ** 484
* Manulife Guaranteed Interest Accounts Maturing 12/31/12, 4.2% ** 15
* Manulife Money Market Money Market ** 776,947
* MFC Short-Term Federal Pooled Separate Account ** 196,416
* Total Return Fund Pooled Separate Account ** 264,015
* MFC Dreyfus P remier Core Bond Fund Pooled Separate Account ** 155,938
* MFC T. Rowe P rice Spectrum Income Fund Pooled Separate Account ** 202,260
* MFC Fidelity Advisor High Income Fund Pooled Separate Account ** 129,763
* Manulife Balanced Fund Pooled Separate Account ** 42,890
* Manulife Equity Income Fund Pooled Separate Account ** 31,391
* MFC Davis New York Venture Fund Pooled Separate Account ** 92,472
* MFC T. Rowe P rice Equity Income Fund Pooled Separate Account ** 68,095
* MFC Mutual Beacon Fund Pooled Separate Account ** 39,677
* MFC Weitz P artners Value Fund Pooled Separate Account ** 75,382
* MFC Fidelity Advisor Div Growth Fund Pooled Separate Account ** 219,311
* MFC Franklin Balance Sheet Fund Pooled Separate Account ** 137,825
* MFC Mutual Discovery Fund Pooled Separate Account ** 44,825
* MFC Domini Social Equity Fund Pooled Separate Account ** 31,796
* Blue Chip Growth Fund Pooled Separate Account ** 127,723
* Manulife Capital Growth Stock Fund Pooled Separate Account ** 98,735
* Manulife Growth P lus Stock Fund Pooled Separate Account ** 75,154
* MFC Morgan Stanley Equity Growth Fund Pooled Separate Account ** 16,006
* MFC Excelsior Value & Restructuring Fund Pooled Separate Account ** 303,625
* MFC Fidelity Contrafund Pooled Separate Account ** 333,407
* MFC Fidelity Advisor Large Cap Fund Pooled Separate Account ** 52,719
* MFC P utnam Global Equity Fund Pooled Separate Account ** 26,152
* MFC P rudential Jennison Growth Fund Pooled Separate Account ** 658
* MFC Janus Advisor Worldwide Pooled Separate Account ** 24,488
* MFC Templeton Foreign Fund Pooled Separate Account ** 68,247
* MFC Scudder International Select Fund Pooled Separate Account ** 41,088
* MFC Fidelity Advisor Overseas Fund Pooled Separate Account ** 12,279
9
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AMERICAN ECOLOGY CORPORATION 401(k) SAVINGS
AND RETIREMENT PLAN AND TRUST
SCHEDULE OF ASSETS HELD (AT YEAR END) (CONTINUED)
EIN: 95-3889638
PLAN NUMBER: 003
DECEMBER 31, 2002
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(e)
(b) (c) (d) Current
(a) Identity of issue Description Cost value
---- -------------------------------------------- --------------------------------- ---- --------
* MFC AIM Constellation Fund Pooled Separate Account ** $ 91,152
* MFC Janus Twenty Fund Pooled Separate Account ** 166,544
* MFC Scudder Mid Cap Fund Pooled Separate Account ** 35,811
* MFC Lord Abbett Development Growth Fund Pooled Separate Account ** 3,467
* MFC Franklin Small-Mid Growth Fund Pooled Separate Account ** 49,006
* MFC AIM Aggressive Growth Fund Pooled Separate Account ** 173,486
* Manulife Emerging Growth Stock Fund Pooled Separate Account ** 7,837
* MFC Dreyfus Founders P assport Fund Pooled Separate Account ** 1,306
* MFC T. Rowe P rice Science & Technology Fund Pooled Separate Account ** 255,264
* MFC Templeton Developing Markets Fund Pooled Separate Account ** 18,385
* MFC Munder NetNet Fund Pooled Separate Account ** 34,617
* 500 Index Fund Pooled Separate Account ** 170,362
* Total Stock Market Index Fund Pooled Separate Account ** 34,040
* Mid Cap Index Fund Pooled Separate Account ** 4,535
* Quantitative Mid Cap Fund Pooled Separate Account ** 51,785
* International Index Fund Pooled Separate Account ** 4,467
* Small Cap Index Fund Pooled Separate Account ** 2,071
* P articipant Loans Bearing Interest between 5% -9.5% - 375,680
* American Ecology Corporation Common Stock ** 205,302
---------------
$ 8,287,456
===============
* Denotes party-in-interest
** Amounts not required as investments are participant directed.
-12-
EXHIBIT INDEX
Exhibit DESCRIPTION
Exhibit 23 Consent of Moss Adams LLP
Exhibit 99.1 Certification of December 31, 2002 Form 11-K by Trustees dated
June 30, 2003
-13-