TRC Reports Strong Second Quarter Fiscal 2002 Results and Declares 3 for 2 Stock Split

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FOR IMMEDIATE RELEASE

TRC Reports Strong Second Quarter Fiscal 2002 Results and Declares 3 for 2 Stock Split

CONNECTICUT, WINDSOR, Feb. 6 -/E-Wire/-- TRC Companies, Inc. (NYSE:TRR) reported today continued strong revenue and earnings growth for the three months ended December 31, 2001, as shown below (dollars in thousands, except per share amounts):

Three Months Ended December 31, 2001 2000 Growth Gross revenue $ 66,924 $ 44,642 50% Net service revenue 46,044 29,134 58% Operating income 6,542 3,684 78% Income before taxes 6,213 3,275 90% Net income 3,837 2,063 86% Earnings per share - diluted $ 0.43 $ 0.26 65%

Six Months Ended December 31, 2001 2000 Growth Gross revenue $ 124,482 $ 81,529 53% Net service revenue 82,522 55,837 48% Operating income 12,272 6,961 76% Income before taxes 11,655 6,067 92% Net income 7,197 3,822 88% Earnings per share - diluted $ 0.83 $ 0.49 69%

Per share amounts are presented on a pre-split basis. Effective July 1, 2001, the Company adopted the provisions of SFAS 141, "Business Combinations' and SFAS 142, "Goodwill and Other Intangible Assets'. In accordance with SFAS 142, the Company no longer amortizes goodwill, however amortization of intangible assets related to current year acquisitions was approximately $0.01 per share for both the three and six months ended December 31, 2001. Goodwill amortization for the three and six months ended December 31, 2000 was approximately $0.03 and $0.06 per share, respectively.

Commenting on the results, Dick Ellison, Chairman, President and CEO noted that, "TRC's growth in both revenue and profit are excellent and our Company continues to outperform the majority of public companies. The outstanding performance of the second quarter is particularly noteworthy in light of the continuing recession and the repercussions from the September 11th national disaster.

Our previously stated long-term goal is to sustain revenue growth in the 30% to 40% range. And we expect earnings growth to be higher as we continue to focus on higher margin markets and value-addedservices. The above table shows our goals being exceeded once again in FY 2002. As in FY 2000 and FY 2001, revenue growth should exceed 40%. Growth in both net service revenue and operating income should continue to be relatively balanced between organic growth and acquisitions. In addition, the operating profit margin for the first six months of FY 2002 increased to 15% from 13% for the same period last year.

TRC is positioned to perform well even if the anticipated economic recovery does not occur for an extended period. Our confidence is supported by the Company's strong backlog of contracted work and our leadership position in a variety of niche markets that have proven to be resilient under current economic conditions. These markets include Exit StrategyÂ® remediation outsourcing, demand and supply side electric power services and infrastructure improvements and expansion.

Our Exit Strategy program is very successful, and we are the leader in this market. This site remediation outsourcing program is providing substantial benefits to our customers, communities and the environment. Contaminated sites are being cleaned up quicker, eliminating threats to health and the environment, and we are returning the sites to beneficial re-use.

Our growing position in the power market is equally exciting. While there is some uncertainty regarding how and when new power plants will actually be constructed, the need for TRC's services to locate and license many potential sites remains strong. Also, there is a strong consensus regarding the need to upgrade and expand the nation's neglected power infrastructure. This includes not only new plants, but also optimizing existing generating plant operations, power distribution networks, fuel pipelines and terminals, private power distribution systems (distributed generation) and energy savings improvements. We have recently made several strategic acquisitions to further support our power industry clients who must enhance their systems to deliver reliable, cost-effective and environmentally responsible power nationwide. The recent turmoil concerning Enron and its financial difficulties has not changed either the need for these services nor our customers' willingness to buy them from us.

There is also a strong consensus regarding the need to upgrade and expand the nation's transportation and water management infrastructure, another important market for TRC. We are well positioned to support these needs in several regions, including the Northeast, Mid-Atlantic, Texas, and California. In older, densely populated areas, such as the Northeast and Mid-Atlantic states, simply maintaining and replacing existing systems will require major programs and expenditures, continuing over many years. In expanding metropolitan areas, new transportation and water management systems must be planned, designed and built to support changing demographic patterns and immigration, particularly in the South and Southwest. For example, the Governor of Texas announced last week a $175 billion concept to build major transportation (rail and highway) and utility corridors across the state to support future population growth and to promote economic expansion.

TRC's continuous success over the past four years, under a variety of economic conditions, would not be possible without the hard work and dedication of our employees. We are particularly proud of our staff and their ability to remain focused, continually delivering exceptional results for our customers and for the company. Over this period, we invested in a program to retain and hire the best talent in the markets we serve. That program continues to attract key personnel to the company. These professionals - and the professionals that are joining us through our acquisitions - continue to grow our capabilities to solve our customers' toughest problems, which in turn, contributes to TRC's long-term growth. Our management team and stakeholders owe a significant measure of gratitude to them for the results they continue to deliver.

We also wish to express our gratitude to our loyal shareholders who support and believe in the Company. While our quarterly results have been exceptional, our focus will continue to be on the Company's long-term success.

As an expression of our confidence in the future and to provide additional liquidity of our stock, the Board of Directors has declared a 3 for 2 stock split. The record date for the split will be February 19, 2002 with distribution on or about March 5, 2002."

TRC provides technical, financial risk management and construction services to industry and government, primarily in the United States market. The Company's main focus is in the areas of infrastructure improvements and expansions, environmental management and power development and conservation.

For more information, contact Dick Ellison at (949) 727-7316.

With the exception of the historical information contained herein, the matters discussed in this press release are forward-looking statements that involve risks and uncertainties including, but not limited to, regulatory uncertainty, funding for government projects, level of demand for the Company's services, product acceptance, industry-wide competitive factors, and political, economic or other conditions. Furthermore, market trends are subject to changes which could adversely affect future results.

Consolidated Statements of Operations (unaudited)

Three Months Ended Six Months Ended December 31, December 31, (in thousands, except per share amounts) 2001 2000 2001 2000

Gross revenue $66,924 $44,642 $124,482 $ 81,529 Less subcontractor costs and direct charges 20,880 15,508 41,960 25,692 Net service revenue 46,044 29,134 82,522 55,837

Operating costs and expenses: Cost of services 37,421 23,641 66,421 45,360 General and administrative expenses 1,310 965 2,403 1,825 Depreciation and amortization 771 844 1,426 1,691 39,502 25,450 70,250 48,876

Income from operations 6,542 3,684 12,272 6,961

Interest expense 329 409 617 894 Income before taxes 6,213 3,275 11,655 6,067

Federal and state income tax provision 2,376 1,212 4,458 2,245 Net income 3,837 2,063 7,197 3,822

Dividends and accretion charges on preferred stock 25 -- 25 -- Net income available to common shareholders $3,812 $2,063 $7,172 $3,822

Earnings per share: Basic $0.47 $0.29 $0.92 $0.54 Diluted 0.43 0.26 0.83 0.49

Average shares outstanding: Basic 8,035 7,165 7,763 7,116 Diluted 8,981 7,845 8,669 7,741

Per share amounts are presented on a pre-split basis. Effective July 1, 2001, the Company adopted the provisions of SFAS 141, "Business Combinations" and SFAS 142, "Goodwill and Other Intangible Assets". In accordance with SFAS 142, the Company no longer amortizes goodwill, however amortization of intangible assets related to current year acquisitions was approximately $0.01 per share for both the three and six months ended December 31, 2001. Goodwill amortization for the three and six months ended December 31, 2000 was approximately $0.03 and $0.06 per share, respectively.

TRC COMPANIES, INC. Consolidated Balance Sheets

December 31, June 30, (in thousands) 2001 2001 (unaudited) ASSETS Current assets: Cash $2,063 $851 Accounts receivable, less allowance for doubtful accounts 87,898 61,090 Insurance recoverable - environmental remediation 2,339 4,055 Deferred income tax benefits 2,387 1,882 Prepaid expenses and other current assets 2,137 1,353 96,824 69,231

Property and equipment, at cost 33,929 28,913 Less accumulated depreciation and amortization 20,149 19,075 13,780 9,838

Goodwill, net of accumulated amortization 73,855 38,943

Investments in and advances to unconsolidated affiliates 5,391 5,134

Long-term accounts receivable 4,120 2,046

Long-term insurance recoverable - environmental liability 1,847 2,011

Intangible and other assets 1,167 469

LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of debt $ 1,299 $ 368 Accounts payable 12,845 7,821 Accrued compensation and benefits 7,974 7,734 Billings in advance of revenue earned 7,548 10,752 Environmental remediation liability 2,593 5,635 Other accrued liabilities 9,057 4,913 41,316 37,223 Noncurrent liabilities: Long-term debt 23,555 14,637 Deferred income taxes 9,725 3,826 Long-term environmental remediation liability 1,847 2,011 35,127 20,474

Mandatorily redeemable preferred stock 14,581 --

Shareholders' equity: Capital stock 881 808 Additional paid-in capital 76,752 48,012 Retained earnings 31,224 24,052 108,857 72,872 Less treasury stock, at cost 2,897 2,897 105,960 69,975 $196,984 $127,672

http://www.trcsolutions.com

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