-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Kgn+WtfMDXtQzKPT/2g6dMc69MReVo1fvzpuic/GFZCejlJo6PNaSZ3gD8a+PtEG m533m1rsF1ckUfNmWAGoAQ== 0000813895-96-000028.txt : 19960806 0000813895-96-000028.hdr.sgml : 19960806 ACCESSION NUMBER: 0000813895-96-000028 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960629 FILED AS OF DATE: 19960805 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: THERMO POWER CORP CENTRAL INDEX KEY: 0000813895 STANDARD INDUSTRIAL CLASSIFICATION: AIR COND & WARM AIR HEATING EQUIP & COMM & INDL REFRIG EQUIP [3585] IRS NUMBER: 042891371 STATE OF INCORPORATION: MA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10573 FILM NUMBER: 96604049 BUSINESS ADDRESS: STREET 1: 81 WYMAN ST STREET 2: PO BOX 9046 CITY: WALTHAM STATE: MA ZIP: 02254-9046 BUSINESS PHONE: 6176221000 MAIL ADDRESS: STREET 1: 81 WYMAN STREET CITY: WALTHAM STATE: MA ZIP: 02254 FORMER COMPANY: FORMER CONFORMED NAME: TECOGEN INC DATE OF NAME CHANGE: 19920703 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 ------------------------------------------ FORM 10-Q (mark one) [ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Quarter Ended June 29, 1996. [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Commission File Number 1-10573 THERMO POWER CORPORATION (Exact name of Registrant as specified in its charter) Massachusetts 04-2891371 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 81 Wyman Street, P.O. Box 9046 Waltham, Massachusetts 02254-9046 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (617) 622-1000 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 [ ] Indicate the number of shares outstanding of each of the issuer's classes of Common Stock, as of the latest practicable date. Class Outstanding at July 26, 1996 ---------------------------- ---------------------------- Common Stock, $.10 par value 12,480,351 PAGE PART I - FINANCIAL INFORMATION Item 1 - Financial Statements THERMO POWER CORPORATION Consolidated Balance Sheet (Unaudited) Assets June 29, September 30, (In thousands) 1996 1995 -------------------------------------------------------------------------- Current Assets: Cash and cash equivalents $ 29,080 $ 23,504 Available-for-sale investments, at quoted market value (amortized cost of $6,063 and $10,624) (includes $429 of related party investments in fiscal 1995) (Note 2) 6,065 10,666 Accounts receivable, less allowances of $516 and $530 19,267 18,203 Unbilled contract costs and fees 8,724 6,228 Inventories: Raw materials and supplies 16,567 17,453 Work in process and finished goods 2,447 4,796 Prepaid income taxes 3,512 3,213 Other current assets 217 752 -------- -------- 85,879 84,815 -------- -------- Rental Assets, at Cost 11,906 7,391 Less: Accumulated depreciation and amortization 1,716 985 -------- -------- 10,190 6,406 -------- -------- Property, Plant and Equipment, at Cost 16,683 15,232 Less: Accumulated depreciation and amortization 8,102 6,765 -------- -------- 8,581 8,467 -------- -------- Long-term Available-for-sale Investments, at Quoted Market Value (amortized cost of $453 and $471) (includes $339 invested in parent company common stock in fiscal 1995) (Note 2) 289 733 -------- -------- Other Assets 352 223 -------- -------- Cost in Excess of Net Assets of Acquired Companies 7,614 7,773 -------- -------- $112,905 $108,417 ======== ======== 2PAGE THERMO POWER CORPORATION Consolidated Balance Sheet (continued) (Unaudited) Liabilities and Shareholders' Investment June 29, September 30, (In thousands except share amounts) 1996 1995 -------------------------------------------------------------------------- Current Liabilities: Accounts payable $ 14,543 $ 13,262 Accrued payroll and employee benefits 2,561 2,732 Customer advances 1,957 971 Accrued warranty costs 2,068 2,100 Accrued income taxes 1,228 1,368 Other accrued expenses 4,182 4,242 Due to Thermo Electron Corporation and affiliated companies 1,321 - -------- -------- 27,860 24,675 -------- -------- Deferred Income Taxes 122 118 -------- -------- Long-term Obligations 322 364 -------- -------- Common Stock of Subsidiary Subject to Redemption ($18,450 redemption value) 17,669 17,435 -------- -------- Shareholders' Investment: Common stock, $.10 par value, 30,000,000 shares authorized; 12,482,999 and 12,478,544 shares issued 1,248 1,248 Capital in excess of par value 53,921 53,898 Retained earnings 11,890 10,822 Treasury stock at cost, 2,648 and 49,758 shares (22) (341) Net unrealized gain (loss) on available-for-sale investments (105) 198 -------- -------- 66,932 65,825 -------- -------- $112,905 $108,417 ======== ======== The accompanying notes are an integral part of these consolidated financial statements. 3PAGE THERMO POWER CORPORATION Consolidated Statement of Income (Unaudited) Three Months Ended ------------------------ June 29, July 1, (In thousands except per share amounts) 1996 1995 -------------------------------------------------------------------------- Revenues $ 32,429 $ 27,514 -------- -------- Costs and Operating Expenses: Cost of revenues 27,106 21,646 Selling, general and administrative expenses 4,202 4,275 Research and development expenses 721 1,007 -------- -------- 32,029 26,928 -------- -------- Operating Income 400 586 Interest Income 437 579 Interest Expense (5) (6) Gain on Sale of Related Party Investments - 768 -------- -------- Income Before Provision for Income Taxes and Minority Interest 832 1,927 Provision for Income Taxes 306 752 Minority Interest Expense 78 69 -------- -------- Net Income $ 448 $ 1,106 ======== ======== Earnings per Share $ .04 $ .09 ======== ======== Weighted Average Shares 12,477 12,378 ======== ======== The accompanying notes are an integral part of these consolidated financial statements. 4PAGE THERMO POWER CORPORATION Consolidated Statement of Income (Unaudited) Nine Months Ended ------------------------ June 29, July 1, (In thousands except per share amounts) 1996 1995 -------------------------------------------------------------------------- Revenues $ 89,637 $ 74,740 -------- -------- Costs and Operating Expenses: Cost of revenues 74,866 58,113 Selling, general and administrative expenses 12,170 11,803 Research and development expenses 2,250 2,253 -------- -------- 89,286 72,169 -------- -------- Operating Income 351 2,571 Interest Income 1,311 1,310 Interest Expense (21) (17) Gain on Sale of Investments, Net (includes $469 and $768 from sale of related party investments in fiscal 1996 and 1995) (Note 2) 451 730 -------- -------- Income Before Provision for Income Taxes and Minority Interest 2,092 4,594 Provision for Income Taxes 790 1,792 Minority Interest Expense 234 104 -------- -------- Net Income $ 1,068 $ 2,698 ======== ======== Earnings per Share $ .09 $ .22 ======== ======== Weighted Average Shares 12,461 12,354 ======== ======== The accompanying notes are an integral part of these consolidated financial statements. 5PAGE THERMO POWER CORPORATION Consolidated Statement of Cash Flows (Unaudited) Nine Months Ended ------------------------ June 29, July 1, (In thousands) 1996 1995 -------------------------------------------------------------------------- Operating Activities: Net income $ 1,068 $ 2,698 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 1,965 1,318 Provision for losses on accounts receivable 5 27 Gain on sale of investments, net (Note 2) (451) (730) Minority interest expense 234 104 Changes in current accounts, excluding the effects of acquisition: Accounts receivable (811) (4,364) Inventories and unbilled contract costs and fees (988) (3,283) Other current assets 404 (390) Accounts payable 1,278 3,355 Other current liabilities 950 (721) -------- -------- Net cash provided by (used in) operating activities 3,654 (1,986) -------- -------- Investing Activities: Purchases of available-for-sale investments (5,000) (365) Proceeds from sale and maturities of available-for-sale investments 8,982 7,774 Proceeds from sale of related party investments (Note 2) 852 1,599 Increase in rental assets (2,129) (1,824) Purchases of property, plant and equipment (1,148) (1,034) Issuance of notes receivable (292) - Other 357 277 -------- -------- Net cash provided by investing activities 1,622 6,427 -------- -------- Financing Activities: Net proceeds from issuance of Company and subsidiary common stock 342 18,000 Repayment of long-term obligations (42) (31) -------- -------- Net cash provided by financing activities 300 17,969 -------- -------- Increase in Cash and Cash Equivalents 5,576 22,410 Cash and Cash Equivalents at Beginning of Period 23,504 7,474 -------- -------- Cash and Cash Equivalents at End of Period $ 29,080 $ 29,884 ======== ======== The accompanying notes are an integral part of these consolidated financial statements. 6PAGE THERMO POWER CORPORATION Notes to Consolidated Financial Statements 1. General The interim consolidated financial statements have been prepared by Thermo Power Corporation (the Company) without audit and, in the opinion of management, reflect all adjustments of a normal recurring nature necessary for a fair statement of the financial position at June 29, 1996, the results of operations for the three- and nine-month periods ended June 29, 1996 and July 1, 1995, and the cash flows for the nine-month periods ended June 29, 1996 and July 1, 1995. Interim results are not necessarily indicative of results for a full year. The consolidated balance sheet presented as of September 30, 1995, has been derived from the consolidated financial statements that have been audited by the Company's independent public accountants. The consolidated financial statements and notes are presented as permitted by Form 10-Q, and do not contain certain information included in the annual financial statements and notes of the Company. The consolidated financial statements and notes included herein should be read in conjunction with the financial statements and notes included in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1995, filed with the Securities and Exchange Commission. 2. Sale of Related Party Investments In February 1996, the Company sold its remaining investment in 6.5% subordinated convertible debentures, which were issued by Thermo TerraTech Inc., a majority-owned subsidiary of Thermo Electron Corporation (Thermo Electron). The Company sold $365,000 principal amount of these debentures for net proceeds of $490,000, which resulted in a gain of $125,000. In December 1995, the Company sold 10,969 shares of Thermo Electron common stock for net proceeds of $362,000, which resulted in a gain of $344,000. Share information for Thermo Electron has been restated to reflect a three-for-two stock split effected in June 1996. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations Description of Business Industrial Refrigeration Systems The Company's FES division supplies standard and custom-designed industrial refrigeration systems used primarily by the food processing, petrochemical, and pharmaceutical industries. NuTemp, Inc. (NuTemp) is a supplier of both remanufactured and new industrial refrigeration and commercial cooling equipment for sale or rental. NuTemp's industrial refrigeration equipment is used primarily in the food processing, petrochemical, and pharmaceutical industries, and its commercial cooling 7PAGE THERMO POWER CORPORATION Description of Business (continued) equipment is used primarily in institutions and commercial buildings, as well as by service contractors. The demand for NuTemp's equipment is typically highest in the summer period. Engines The Company's Crusader Engines (Crusader) division manufactures gasoline engines for recreational boats; natural gas engines for vehicular, cooling, pumping, refrigeration, and other industrial applications; and LPG (liquefied petroleum gas) and gasoline engines for lift trucks. Cooling and Cogeneration Systems The Company's Tecogen division designs, develops, markets, and services packaged cooling and cogeneration systems fueled principally by natural gas for sale to a wide range of commercial, institutional, industrial, and multi-unit residential users. Certain large-capacity cooling systems are manufactured by FES, and the cogeneration systems are manufactured by Crusader. Tecogen conducts research and development of natural gas-engine technology, and is currently demonstrating a diesel-to-natural gas conversion system for buses and other fleet vehicles. Tecogen also conducts research and development on applications of thermal energy. The Company's ThermoLyte Corporation (ThermoLyte) subsidiary is developing a family of propane-powered area lights, flashlights, emergency lights, and other lighting products. The Company's revenues by industry segment are shown in the following table. Three Months Ended Nine Months Ended ------------------- -------------------- June 29, July 1, June 29, July 1, (In thousands) 1996 1995 1996 1995 -------------------------------------------------------------------------- Industrial Refrigeration Systems $ 19,916 $ 17,328 $ 52,949 $ 46,769 Engines 6,626 6,372 22,183 18,053 Cooling and Cogeneration Systems 6,402 4,514 15,925 11,737 Intersegment sales elimination (515) (700) (1,420) (1,819) -------- -------- -------- -------- $ 32,429 $ 27,514 $ 89,637 $ 74,740 ======== ======== ======== ======== Results of Operations Third Quarter Fiscal 1996 Compared With Third Quarter Fiscal 1995 Total revenues increased 18% to $32,429,000 in the third quarter of fiscal 1996 from $27,514,000 in the third quarter of fiscal 1995. Industrial Refrigeration Systems segment revenues increased to $19,916,000 in 1996 from $17,328,000 in 1995. Revenues at FES increased in 1996 primarily due to greater demand for custom-designed industrial 8PAGE THERMO POWER CORPORATION Third Quarter Fiscal 1996 Compared With Third Quarter Fiscal 1995 (continued) refrigeration packages. Revenues at NuTemp decreased slightly primarily due to lower temperatures in 1996 compared with 1995, which resulted in lower demand for rental equipment. Engines segment revenues increased to $6,626,000 in 1996 from $6,372,000 in 1995 primarily due to the inclusion of revenues from lift-truck engines, offset in part by a decrease of $784,000 in revenues from marine-engine related products. Cooling and Cogeneration Systems segment revenues increased 42% to $6,402,000 in 1996 from $4,514,000 in 1995 primarily due to an increase in revenues from gas-fueled cooling systems. The gross profit margin decreased to 16% in the third quarter of fiscal 1996 from 21% in the third quarter of fiscal 1995. The gross profit margin for the Industrial Refrigeration Systems segment decreased to 18% in 1996 from 24% in 1995 primarily due to lower margins at FES resulting from a change in the sales mix. FES' sales to the petrochemical industry, which have inherently lower margins, increased in 1996 from 1995. To a lesser extent, the gross profit margin declined due to a decrease in revenues at NuTemp and higher depreciation expense as a result of an increase in NuTemp's rental assets. The Company expects a cost increase in one of the major components of its industrial refrigeration packages to adversely affect the gross profit margin beginning in the fourth quarter of fiscal 1996. The gross profit margin for the Engines segment increased to 10% in 1996 from 8% in 1995 primarily due to a reduction in warranty expenses. The gross profit margin for the Cooling and Cogeneration Systems segment decreased to 18% in 1996 from 27% in 1995 primarily due to increased revenues from large gas-cooling systems, which have inherently lower margins. Selling, general and administrative expenses as a percentage of revenues decreased to 13% in the third quarter of fiscal 1996 from 16% in the third quarter of fiscal 1995 primarily due to an increase in total revenues. Research and development expenses as a percentage of revenues decreased to 2% in 1996 from 4% in 1995. An increase in research and development expenses for gas-fueled lighting products was more than offset by a decrease in spending on research and development of natural gas-engine products. Interest income decreased to $437,000 in the third quarter of fiscal 1996 from $579,000 in the third quarter of fiscal 1995 due to lower average invested amounts in 1996 compared with 1995. Gain on sale of related party investments in 1995 represents a gain on the sale of the Company's investment in subordinated convertible debentures, which were issued by Thermedics Inc., a majority-owned subsidiary of Thermo Electron Corporation (Thermo Electron). The effective tax rate was 37% in the third quarter of fiscal 1996, compared with 39% in the third quarter of fiscal 1995. These rates exceeded the statutory federal income tax rate primarily due to the impact of state income taxes. The effective tax rate decreased in 1996 from 1995 due to losses benefited at one of the Company's subsidiaries. 9PAGE THERMO POWER CORPORATION First Nine Months Fiscal 1996 Compared With First Nine Months Fiscal 1995 Total revenues increased 20% to $89,637,000 in the first nine months of fiscal 1996 from $74,740,000 in the first nine months of fiscal 1995. Industrial Refrigeration Systems segment revenues increased to $52,949,000 in 1996 from $46,769,000 in 1995. Revenues at FES increased in 1996 primarily due to greater demand for custom-designed industrial refrigeration packages. Revenues at NuTemp increased by $179,000 primarily due to increased demand for remanufactured commercial cooling equipment, offset in part by lower demand for rental equipment resulting from generally lower temperatures in 1996 compared with 1995. Engines segment revenues increased 23% to $22,183,000 in 1996 from $18,053,000 in 1995 primarily due to increased demand for gasoline and natural gas TecoDrive(R) engines and the inclusion of revenues from lift-truck engines, offset in part by a decrease of $2,717,000 in revenues from marine-engine related products. Cooling and Cogeneration Systems segment revenues increased 36% to $15,925,000 in 1996 from $11,737,000 in 1995 primarily due to an increase in revenues from gas-fueled cooling systems. Results for the Cooling and Cogeneration Systems segment in 1995 include a $1,187,000 fee received from one of the Company's distributors of packaged cogeneration systems to satisfy the financial obligations under a minimum purchase contract. The gross profit margin decreased to 16% in the first nine months of fiscal 1996 from 22% in the first nine months of fiscal 1995. The gross profit margin for the Industrial Refrigeration Systems segment decreased to 19% in 1996 from 24% in 1995. The decrease is primarily due to a change in the sales mix at FES as discussed in the results of operations for the third quarter. To a lesser extent, the gross profit margin decreased due to lower manufacturing efficiencies at FES and higher warranty expenses at NuTemp in 1996 compared with 1995. The gross profit margin for the Engines segment decreased to 6% in 1996 from 11% in 1995 primarily due to unusually high warranty expenses incurred in the first six months of fiscal 1996 and, to a lesser extent, startup costs associated with the introduction of lift-truck engines. The gross profit margin for the Cooling and Cogeneration Systems segment decreased to 23% in 1996 from 30% in 1995 primarily due to the inclusion in 1995 of a fee received from one of the Company's distributors of packaged cogeneration systems discussed above. Selling, general and administrative expenses as a percentage of revenues decreased to 14% in the first nine months of fiscal 1996 from 16% in the first nine months of fiscal 1995 primarily due to an increase in total revenues. Research and development expenses as a percentage of revenues remained unchanged at 3% in 1996 and 1995. An increase in research and development expenses for gas-fueled lighting products was offset by a decrease in spending on research and development of natural gas-engine products. Interest income remained relatively unchanged at $1,311,000 in the first nine months of fiscal 1996, compared with $1,310,000 in the first nine months of fiscal 1995. Interest income earned on the proceeds from ThermoLyte's March 1995 private placement was offset by a decrease in interest income earned on the Company's other investments due to lower 10PAGE THERMO POWER CORPORATION First Nine Months Fiscal 1996 Compared With First Nine Months Fiscal 1995 (continued) average invested amounts. Gain on sale of investments, net, in 1996 primarily represents a gain of $344,000 relating to the sale of the Company's remaining investment in Thermo Electron common stock and a gain of $125,000 relating to the sale of the Company's remaining investment in 6.5% subordinated convertible debentures, which were issued by Thermo TerraTech Inc., a majority-owned subsidiary of Thermo Electron (Note 2). The effective tax rate was 38% in the first nine months of fiscal 1996, compared with 39% in the first nine months of fiscal 1995. These rates exceeded the statutory federal income tax rate primarily due to the impact of state income taxes. The effective tax rate decreased in 1996 from 1995 due to losses benefited at one of the Company's subsidiaries. Liquidity and Capital Resources Consolidated working capital was $58,019,000 at June 29, 1996, compared with $60,140,000 at September 30, 1995. Included in working capital are cash, cash equivalents, and available-for-sale investments of $35,145,000 at June 29, 1996, compared with $34,170,000 at September 30, 1995. Of the $35,145,000 balance at June 29, 1996, $17,439,000 was held by ThermoLyte and the remainder was held by the Company and its wholly owned subsidiaries. During the first nine months of fiscal 1996, $3,654,000 of cash was provided by operating activities. During the first quarter of fiscal 1996, the Company acquired the thermoelectric cooling module business of ThermoTrex Corporation (ThermoTrex) for $860,000, which was the net book value of the business acquired. ThermoTrex is a majority-owned subsidiary of Thermo Electron. During the first nine months of 1996, the Company expended $3,277,000 for purchases of rental assets and property, plant and equipment. During the remainder of fiscal 1996, the Company expects to make capital expenditures of approximately $2,000,000, of which approximately $1,700,000 is expected to be used to expand and upgrade the manufacturing facilities at FES. The Company believes its current resources are sufficient to meet the capital requirements of its existing operations for the foreseeable future. 11PAGE THERMO POWER CORPORATION SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized as of the 5th day of August 1996. THERMO POWER CORPORATION Paul F. Kelleher ---------------------- Paul F. Kelleher Chief Accounting Officer John N. Hatsopoulos ---------------------- John N. Hatsopoulos Chief Financial Office EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO POWER CORP.'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE 29, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS SEP-28-1996 JUN-29-1996 29,080 6,065 19,783 516 19,014 85,879 16,683 8,102 112,905 27,860 322 0 0 1,248 65,684 112,905 89,637 89,637 74,866 74,866 2,250 5 21 2,092 790 1,068 0 0 0 1,068 .09 0
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