-----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, Bm9SogQhCCMiW5Hf/poFCz5T7wkPPDvAcPo9V7LVNfGRafgfns4BOX5V3Lo/U4m+ I3so8VbhT0lGG/tJ7+dyvw== 0000813895-97-000011.txt : 19970220 0000813895-97-000011.hdr.sgml : 19970220 ACCESSION NUMBER: 0000813895-97-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961228 FILED AS OF DATE: 19970203 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: 97516795 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 December 28, 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 January 24, 1997 ---------------------------- ------------------------------- Common Stock, $.10 par value 12,490,647 PAGE PART I - FINANCIAL INFORMATION Item 1 - Financial Statements THERMO POWER CORPORATION Consolidated Balance Sheet (Unaudited) Assets December 28, September 28, (In thousands) 1996 1996 -------------------------------------------------------------------------- Current Assets: Cash and cash equivalents $ 29,664 $ 29,852 Available-for-sale investments, at quoted market value (amortized cost of $5,067 and $6,022) 5,070 6,028 Accounts receivable, less allowance of $589 in fiscal 1997 and 1996 18,440 18,054 Unbilled contract costs and fees 8,264 7,110 Inventories: Raw materials and supplies 15,281 16,233 Work in process and finished goods 1,347 2,404 Prepaid income taxes 3,312 2,921 Other current assets 284 324 -------- -------- 81,662 82,926 -------- -------- Rental Assets, at Cost 12,009 12,358 Less: Accumulated depreciation and amortization 2,419 2,378 -------- -------- 9,590 9,980 -------- -------- Property, Plant and Equipment, at Cost 18,336 17,580 Less: Accumulated depreciation and amortization 8,174 7,813 -------- -------- 10,162 9,767 -------- -------- Long-term Available-for-sale Investments, at Quoted Market Value (amortized cost of $210) 184 184 -------- -------- Other Assets 327 345 -------- -------- Cost in Excess of Net Assets of Acquired Companies 7,415 7,509 -------- -------- $109,340 $110,711 ======== ======== 2PAGE THERMO POWER CORPORATION Consolidated Balance Sheet (continued) (Unaudited) Liabilities and Shareholders' Investment December 28, September 28, (In thousands except share amounts) 1996 1996 -------------------------------------------------------------------------- Current Liabilities: Accounts payable $ 11,567 $ 14,005 Accrued payroll and employee benefits 2,689 2,832 Billings in excess of contract costs and fees 1,823 1,017 Customer advances 1,285 1,096 Accrued warranty costs 2,357 2,323 Accrued income taxes 883 713 Other accrued expenses 2,981 2,710 Due to Thermo Electron Corporation and affiliated companies 84 511 -------- -------- 23,669 25,207 -------- -------- Deferred Income Taxes 114 84 -------- -------- Long-term Obligations 291 305 -------- -------- Common Stock of Subsidiary Subject to Redemption ($18,450 redemption value) 17,825 17,747 -------- -------- Shareholders' Investment: Common stock, $.10 par value, 30,000,000 shares authorized; 12,493,371 and 12,487,149 shares issued 1,249 1,249 Capital in excess of par value 54,519 54,448 Retained earnings 11,711 11,707 Treasury stock at cost, 2,724 shares (23) (23) Net unrealized loss on available- for-sale investments (15) (13) -------- -------- 67,441 67,368 -------- -------- $109,340 $110,711 ======== ======== The accompanying notes are an integral part of these consolidated financial statements. 3PAGE THERMO POWER CORPORATION Consolidated Statement of Income (Unaudited) Three Months Ended ---------------------------- December 28, December 30, (In thousands except per share amounts) 1996 1995 -------------------------------------------------------------------------- Revenues $ 28,786 $ 27,452 -------- -------- Costs and Operating Expenses: Cost of revenues 24,533 22,665 Selling, general and administrative expenses 3,780 3,737 Research and development expenses 644 738 -------- -------- 28,957 27,140 -------- -------- Operating Income (Loss) (171) 312 Interest Income 451 437 Interest Expense (5) (11) Gain on Sale of Investments, Net (includes $344 from sale of related party investments in fiscal 1996) - 326 -------- -------- Income Before Provision for Income Taxes and Minority Interest 275 1,064 Provision for Income Taxes 193 409 Minority Interest Expense 78 78 -------- -------- Net Income $ 4 $ 577 ======== ======== Earnings per Share $ - $ .05 ======== ======== Weighted Average Shares 12,489 12,444 ======== ======== The accompanying notes are an integral part of these consolidated financial statements. 4PAGE THERMO POWER CORPORATION Consolidated Statement of Cash Flows (Unaudited) Three Months Ended -------------------------- December 28, December 30, (In thousands) 1996 1995 -------------------------------------------------------------------------- Operating Activities: Net income $ 4 $ 577 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 523 636 Provision for losses on accounts receivable - (55) Gain on sale of investments, net - (326) Minority interest expense 78 78 Other noncash items (68) - Changes in current accounts: Accounts receivable (386) 447 Inventories and unbilled contract costs and fees 855 607 Other current assets (351) 455 Accounts payable (2,438) (2,796) Other current liabilities 975 334 -------- -------- Net cash used in operating activities (808) (43) -------- -------- Investing Activities: Proceeds from sale and maturities of available- for-sale investments 1,000 - Proceeds from sale of related party investments - 362 Increase in rental assets (529) (521) Proceeds from sale of rental assets 878 206 Purchases of property, plant and equipment (786) (385) Issuance of notes receivable - (165) Other - 152 -------- -------- Net cash provided by (used in) investing activities 563 (351) -------- -------- Financing Activities: Net proceeds from issuance of Company common stock 71 181 Repayment of long-term obligations (14) (14) -------- -------- Net cash provided by financing activities 57 167 -------- -------- Decrease in Cash and Cash Equivalents (188) (227) Cash and Cash Equivalents at Beginning of Period 29,852 23,504 -------- -------- Cash and Cash Equivalents at End of Period $ 29,664 $ 23,277 ======== ======== The accompanying notes are an integral part of these consolidated financial statements. 5PAGE 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 December 28, 1996, the results of operations for the three-month periods ended December 28, 1996 and December 30, 1995, and the cash flows for the three-month periods ended December 28, 1996 and December 30, 1995. Interim results are not necessarily indicative of results for a full year. The consolidated balance sheet presented as of September 28, 1996, 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 28, 1996, filed with the Securities and Exchange Commission. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations Forward-looking statements, within the meaning of Section 21E of the Securities Exchange Act of 1934, are made throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words "believes," "anticipates," "plans," "expects," "seeks," "estimates," and similar expressions are intended to identify forward-looking statements. There are a number of important factors that could cause the results of the Company to differ materially from those indicated by such forward-looking statements, including those detailed under the caption "Forward-looking Statements" in Exhibit 13 to the Company's Annual Report on Form 10-K for the fiscal year ended September 28, 1996, filed with the Securities and Exchange Commission. Overview The Company's business is divided into three segments: Industrial Refrigeration Systems, Engines, and Cooling and Cogeneration Systems. Through the Company's FES division, the Industrial Refrigeration Systems segment 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 6PAGE THERMO POWER CORPORATION Overview (continued) is used primarily in the food-processing, petrochemical, and pharmaceutical industries, and its commercial cooling 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 months. Cool summer weather can adversely affect the Company's NuTemp business because the Company's cooling systems are used primarily to reduce temperatures below ambient air temperatures. Within the Engines segment, the Company's Crusader Engines division (Crusader) manufactures gasoline engines for recreational boats; propane and gasoline engines for lift trucks; and natural gas engines for vehicular, cooling, pumping, refrigeration, and other industrial applications. The Cooling and Cogeneration Systems segment consists of the Company's Tecogen division and the Company's ThermoLyte Corporation (ThermoLyte) subsidiary, formed in March 1995. Tecogen 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 also conducts research and development of natural gas-engine technology and on applications of thermal energy. ThermoLyte is developing and commercializing a family of gas-powered lighting products, including 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 --------------------------- December 28, December 30, (In thousands) 1996 1995 ------------------------------------------------------------------------ Industrial Refrigeration Systems $ 19,146 $ 17,071 Engines 5,407 7,253 Cooling and Cogeneration Systems 4,616 3,610 Intersegment sales elimination (383) (482) -------- -------- $ 28,786 $ 27,452 ======== ======== Results of Operations First Quarter Fiscal 1997 Compared With First Quarter Fiscal 1996 Total revenues increased 5% to $28,786,000 in the first quarter of fiscal 1997 from $27,452,000 in the first quarter of fiscal 1996. Industrial Refrigeration Systems segment revenues increased 12% to $19,146,000 in 1997 from $17,071,000 in 1996, primarily due to greater demand for custom-designed industrial refrigeration packages at FES and, to a lesser extent, increased shipments of remanufactured commercial 7PAGE THERMO POWER CORPORATION First Quarter Fiscal 1997 Compared With First Quarter Fiscal 1996 (continued) cooling equipment at NuTemp. Engines segment revenues decreased 25% to $5,407,000 in 1997 from $7,253,000 in 1996, primarily due to the inclusion in 1996 of a large shipment of TecoDrive(R) natural gas engines to one customer and, to a lesser extent, a decrease of $425,000 in revenues from marine-engine related products. Revenues from marine-engine related products declined, primarily due to increased competition and a decrease in demand. These trends are expected to continue. Cooling and Cogeneration Systems segment revenues increased 28% to $4,616,000 in 1997 from $3,610,000 in 1996 primarily due to an increase in demand for gas-fueled cooling systems and product services. The gross profit margin decreased to 15% in the first quarter of fiscal 1997 from 17% in the first quarter of fiscal 1996. The gross profit margin for the Industrial Refrigeration Systems segment decreased to 18% in 1997 from 21% in 1996 primarily due to lower margins at FES resulting from a change in sales mix and a cost increase in one of the major components of its industrial refrigeration packages. Although the Company expects to phase in a new manufacturer for this component by mid-year 1997, this cost increase is expected to continue to adversely affect the gross profit margin during 1997. In addition, the gross profit margin for the Industrial Refrigeration Systems segment was affected by lower margins at NuTemp resulting from a change in sales mix and lower manufacturing efficiencies. NuTemp's sales of new and remanufactured commercial cooling equipment, which have lower margins than revenues from rental equipment, increased in 1997 from 1996. NuTemp experienced lower manufacturing efficiencies during the first quarter of 1997 due to the initial fabrication of new commercial cooling products. The gross profit margin for the Engines segment decreased to 3% in 1997 from 5% in 1996, primarily due to continued high levels of warranty expense and a reduction in revenues in 1997 compared with 1996. The gross profit margin for the Cooling and Cogeneration Systems segment decreased to 18% in 1997 from 24% in 1996, primarily due to increased revenues from gas-fueled cooling systems that have lower margins. Selling, general and administrative expenses as a percentage of revenues remained relatively unchanged at 13% in the first quarter of fiscal 1997, compared with 14% in the first quarter of fiscal 1996. Research and development expenses decreased to $644,000 in 1997 from $738,000 in 1996. 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. Gain on sale of investments, net, in the first quarter of fiscal 1996 primarily represents a gain relating to the sale of the Company's remaining investment in Thermo Electron Corporation common stock. The effective tax rate was 70% in the first quarter of fiscal 1997 and 38% in the first quarter of fiscal 1996. The effective tax rate exceeded the statutory federal income tax rate, primarily due to an increase in the valuation allowance in 1997 for net operating loss carryforwards of the Company's ThermoLyte subsidiary and the impact of state income taxes. 8PAGE THERMO POWER CORPORATION Liquidity and Capital Resources Consolidated working capital was $57,993,000 at December 28, 1996, compared with $57,719,000 at September 28, 1996. Included in working capital are cash, cash equivalents, and available-for-sale investments of $34,734,000 at December 28, 1996, compared with $35,880,000 at September 28, 1996. Of the $34,734,000 balance at December 28, 1996, $16,169,000 was held by ThermoLyte and the remainder was held by the Company and its wholly owned subsidiaries. During the first three months of fiscal 1997, $808,000 of cash was used by operating activities, which included $2,438,000 of cash used to reduce accounts payable. During the first three months of fiscal 1997, the Company expended $1,315,000 for purchases of rental assets and property, plant and equipment and recorded $878,000 in proceeds from the sale of rental assets. During the remainder of fiscal 1997, the Company expects to make capital expenditures of approximately $3,500,000. The Company believes its existing resources are sufficient to meet the capital requirements of its existing operations for the foreseeable future. 9PAGE 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 3rd day of February 1997. THERMO POWER CORPORATION Paul F. Kelleher -------------------------- Paul F. Kelleher Chief Accounting Officer John N. Hatsopoulos -------------------------- John N. Hatsopoulos Vice President and Chief Financial Officer 10PAGE THERMO POWER CORPORATION EXHIBIT INDEX Exhibit Number Description of Exhibit - -------------------------------------------------------------------------------- 27 Financial Data Schedule. EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO POWER CORPORATION'S QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED DECEMBER 28, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS SEP-27-1997 DEC-28-1996 29,664 5,070 19,029 589 16,628 81,662 18,336 8,174 109,340 23,669 291 0 0 1,249 66,192 109,340 28,786 28,786 24,533 24,533 644 0 5 197 193 4 0 0 0 4 0 0
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