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 September 28, 1996.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
Commission File Number 1-14254
THERMO SENTRON INC.
(Exact name of Registrant as specified in its charter)
Delaware 41-1827303
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
501 90th Avenue N.W.
Minneapolis, Minnesota 55433
(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 October 25, 1996
---------------------------- --------------------------------
Common Stock, $.01 par value 9,875,000
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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
THERMO SENTRON INC.
Consolidated Balance Sheet
(Unaudited)
Assets
September 28, December 30,
(In thousands) 1996 1995
------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents $ 26,556 $ 3,012
Available-for-sale investments, at quoted
market value (amortized cost of $6,678
in 1996) 6,687 -
Accounts receivable, less allowances
of $2,046 and $2,291 16,267 12,935
Inventories:
Raw materials 4,041 2,984
Work in process 2,321 2,184
Finished goods 4,363 3,638
Prepaid expenses and income taxes 1,488 1,331
-------- --------
61,723 26,084
-------- --------
Property, Plant and Equipment, at Cost 3,484 2,745
Less: Accumulated depreciation and
amortization 1,473 931
-------- --------
2,011 1,814
-------- --------
Other Assets 3,657 247
-------- --------
Cost in Excess of Net Assets of Acquired
Companies (Note 3) 37,115 33,815
-------- --------
$104,506 $ 61,960
======== ========
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THERMO SENTRON INC.
Consolidated Balance Sheet (continued)
(Unaudited)
Liabilities and Shareholders' Investment
September 28, December 30,
(In thousands except share amounts) 1996 1995
-----------------------------------------------------------------------
Current Liabilities:
Notes payable and current maturity of
long-term obligation $ 4,049 $ 7,961
Accounts payable 5,324 5,793
Accrued payroll and employee benefits 3,899 4,006
Accrued income taxes 2,745 1,787
Customer deposits 1,342 1,494
Accrued installation and warranty expenses 1,204 1,539
Other accrued expenses 3,742 3,778
Due to parent company and Thermo
Electron Corporation 1,038 579
-------- --------
23,343 26,937
-------- --------
Deferred Income Taxes 336 336
-------- --------
Shareholders' Investment (Note 2):
Net parent company investment - 34,836
Common stock, $.01 par value, 30,000,000
shares authorized; 9,875,000 shares issued
and outstanding 99 -
Capital in excess of par value 77,072 -
Retained earnings 3,548 -
Cumulative translation adjustment 102 (149)
Net unrealized gain on available-for-sale
investments 6 -
-------- --------
80,827 34,687
-------- --------
$104,506 $ 61,960
======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
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THERMO SENTRON INC.
Consolidated Statement of Income
(Unaudited)
Three Months Ended
----------------------------
September 28, September 30,
(In thousands except per share amounts) 1996 1995
-----------------------------------------------------------------------
Revenues $17,518 $17,460
------- -------
Costs and Operating Expenses:
Cost of revenues 10,499 11,121
Selling, general and administrative expenses 4,827 4,084
Research and development expenses 463 457
------- -------
15,789 15,662
------- -------
Operating Income 1,729 1,798
Interest Income 452 37
Interest Expense (66) (224)
Other Income, Net 56 12
------- -------
Income Before Provision for Income Taxes 2,171 1,623
Provision for Income Taxes 825 619
------- -------
Net Income $ 1,346 $ 1,004
======= =======
Earnings per Share $ .14 $ .14
======= =======
Weighted Average Shares 9,875 7,027
======= =======
The accompanying notes are an integral part of these consolidated
financial statements.
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THERMO SENTRON INC.
Consolidated Statement of Income
(Unaudited)
Nine Months Ended
-----------------------------
September 28, September 30,
(In thousands except per share amounts) 1996 1995
------------------------------------------------------------------------
Revenues $51,546 $51,033
------- -------
Costs and Operating Expenses:
Cost of revenues 30,931 31,286
Selling, general and administrative expenses 14,048 13,099
Research and development expenses 1,454 1,440
------- -------
46,433 45,825
------- -------
Operating Income 5,113 5,208
Interest Income 965 109
Interest Expense (490) (676)
Other Income (Expense), Net 134 (70)
------- -------
Income Before Provision for Income Taxes 5,722 4,571
Provision for Income Taxes 2,174 1,739
------- -------
Net Income $ 3,548 $ 2,832
======= =======
Earnings per Share $ .40 $ .40
======= =======
Weighted Average Shares 8,916 7,027
======= =======
The accompanying notes are an integral part of these consolidated
financial statements.
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THERMO SENTRON INC.
Consolidated Statement of Cash Flows
(Unaudited)
Nine Months Ended
-----------------------------
September 28, September 30,
(In thousands) 1996 1995
-----------------------------------------------------------------------
Operating Activities:
Net income $ 3,548 $ 2,832
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 1,412 1,172
Provision for losses on accounts
receivable 286 205
Increase in deferred income taxes - 20
Other noncash items (135) 67
Changes in current accounts,
excluding the effects of
acquisitions:
Accounts receivable (2,642) (1,860)
Inventories (121) (1,869)
Other current assets 91 266
Accounts payable (461) 917
Other current liabilities (793) (437)
-------- --------
Net cash provided by operating
activities 1,185 1,313
-------- --------
Investing Activities:
Acquisition, net of cash acquired (Note 3) (4,323) -
Acquisition of product line (Note 3) (4,437) -
Purchases of available-for-sale investments (11,583) -
Proceeds from sale and maturities of
available-for-sale investments 5,037 -
Purchases of property, plant and equipment (639) (517)
Other 20 54
-------- --------
Net cash used in investing
activities (15,925) (463)
-------- --------
Financing Activities:
Net proceeds from issuance of Company
common stock (Note 2) 42,335 -
Net decrease in short-term borrowings (1,944) (1,961)
Repayment of long-term obligation (2,176) -
Net transfer from parent company - 363
-------- --------
Net cash provided by (used in)
financing activities $ 38,215 $ (1,598)
-------- --------
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THERMO SENTRON INC.
Consolidated Statement of Cash Flows (continued)
(Unaudited)
Nine Months Ended
-----------------------------
September 28, September 30,
(In thousands) 1996 1995
------------------------------------------------------------------------
Exchange Rate Effect on Cash $ 69 $ (70)
-------- --------
Increase (Decrease) in Cash and Cash
Equivalents 23,544 (818)
Cash and Cash Equivalents at Beginning of
Period 3,012 2,089
-------- --------
Cash and Cash Equivalents at End of Period $ 26,556 $ 1,271
======== ========
Noncash Activities:
Fair value of assets of acquired company $ 6,510 $ -
Cash paid for acquired company (4,464) -
-------- --------
Liabilities assumed of acquired company $ 2,046 $ -
======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
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THERMO SENTRON INC.
Notes to Consolidated Financial Statements
1. General
The interim consolidated financial statements presented have been
prepared by Thermo Sentron Inc. (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
September 28, 1996, the results of operations for the three- and
nine-month periods ended September 28, 1996 and September 30, 1995, and
the cash flows for the nine-month periods ended September 28, 1996 and
September 30, 1995. Interim results are not necessarily indicative of
results for a full year.
The consolidated balance sheet presented as of December 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 Registration
Statement on Form S-1 (File No. 333-806), filed with the Securities and
Exchange Commission.
2. Initial Public Offering
In April 1996, the Company sold 2,875,000 shares of its common
stock in an initial public offering at $16.00 per share for net proceeds
of approximately $42.3 million. The Company used part of such proceeds to
repay approximately $12.6 million in short-term borrowings from Thermo
Electron Corporation (Thermo Electron) and third parties (Note 3).
Following the offering, Thermedics Inc., a majority-owned subsidiary of
Thermo Electron, owned approximately 71% of the Company's outstanding
common stock.
3. Acquisitions
In January 1996, the Company acquired Hitech Electrocontrols
Limited (Hitech), a U.K.-based manufacturer of metal-detection equipment
and specialty checkweighing equipment for the baking industry. The
Company acquired Hitech for approximately $4.5 million in cash. The
acquisition was financed with a credit facility, denominated in British
pounds sterling, which was repaid in April 1996.
The acquisition has been accounted for using the purchase method of
accounting, and the results of operations have been included in the
accompanying financial statements from the date of acquisition. The cost
of the acquisition exceeded the estimated fair value of the acquired net
assets by approximately $4.9 million, which is being amortized over 40
years. Allocation of the purchase price was based on an estimate of the
fair value of the net assets acquired. Pro forma data is not presented
since the acquisition was not material to the Company's results of
operations and financial position.
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THERMO SENTRON INC.
3. Acquisitions (continued)
In April 1996, the Company purchased the assets of the solids
flow-measurement product line of Endress + Hauser, Inc. (Endress +
Hauser) for approximately $4.4 million in cash. Pursuant to the purchase
agreement, the purchase price is subject to adjustment, not to exceed
$500,000, if revenues from this product line for the twelve months ended
April 1, 1997 exceed specified dollar amounts. The product line purchase
was financed with an advance from Thermo Electron which was repaid in
April 1996.
The product line purchase has been accounted for using the purchase
method of accounting and the results of operations have been included in
the accompanying financial statements from the date of acquisition.
Allocation of the purchase price was based on an estimate of the fair
value of assets purchased.
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. These statements involve a number of risks and
uncertainties, including those detailed in Item 5 of this Quarterly
Report on Form 10-Q.
Overview
The Company designs, develops, manufactures, and sells high-speed
precision-weighing and inspection equipment for industrial production and
packaging lines. The Company serves two principal markets: packaged goods
and bulk materials. The Company's products for the packaged-goods market
include a broad line of checkweighing equipment and metal detectors that
can be integrated at various stages in production lines for process
control and quality assurance. These products are sold primarily to
customers in the food-processing, baking, and pharmaceutical industries.
Products in the Company's bulk-material product line include
conveyor-belt scales, solid level-measurement and conveyor-monitoring
devices, and sampling systems. These products are sold primarily to
customers in the mining and material-processing industries, as well as to
electric utilities, chemical, and other manufacturing companies.
A substantial portion of the Company's sales are derived from sales
of products outside the United States, through exports and sales by the
Company's foreign subsidiaries. Although the Company seeks to charge its
customers in the same currency as its operating costs, the Company's
financial performance and competitive position can be affected by
currency exchange rate fluctuations. The Company expects an increase in
the percentage of its revenues derived from international operations
during the next twelve months.
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THERMO SENTRON INC.
Results of Operations
Third Quarter 1996 Compared With Third Quarter 1995
Revenues were $17,518,000 in the third quarter of 1996, compared
with $17,460,000 in the third quarter of 1995. The increase in revenues
reflects the inclusion of $897,000 in revenues from Hitech
Electrocontrols Limited (Hitech), which was acquired in January 1996, and
$1,098,000 in revenues from the Endress + Hauser, Inc. (Endress + Hauser)
product line, which was purchased in April 1996. These increases were
largely offset by the inclusion of $1,650,000 in revenues in the third
quarter of 1995 from the sale of a large sampling system to a customer in
Taiwan.
The gross profit margin increased to 40% in the third quarter of
1996 from 36% in the third quarter of 1995. The gross profit margin in
the third quarter of 1995 was affected by a lower margin on the large
sampling system sold in the third quarter of 1995.
Selling, general and administrative expenses as a percentage of
revenues increased to 28% in the third quarter of 1996 from 23% in the
third quarter of 1995, primarily due to increased selling and marketing
expenses for newly introduced products and the purchased Endress + Hauser
product line. In addition, selling, general and administrative expenses
as a percentage of revenues in 1995 were affected by lower costs on the
large sampling system sold. Research and development expenses as a
percentage of revenues were unchanged at 2.6% in the third quarter of
1996 and 1995.
Interest income increased to $452,000 in the third quarter of 1996
from $37,000 in the third quarter of 1995, primarily due to interest
income earned on the invested proceeds from the Company's April 1996
initial public offering of common stock. Interest expense decreased to
$66,000 in the third quarter of 1996 from $224,000 in the third quarter
of 1995 primarily due to repayment of a note payable and a reduction in
short-term borrowings.
The effective tax rate was 38% in the third quarter of 1996 and
1995. The effective tax rate exceeded the statutory federal income tax
rate due primarily to the impact of state income taxes and foreign tax
rate and tax law differences.
First Nine Months 1996 Compared With First Nine Months 1995
Revenues were $51,546,000 in the first nine months of 1996,
compared with $51,033,000 in the first nine months of 1995. The increase
in revenues reflects the inclusion of $3,211,000 in revenues from Hitech,
which was acquired in January 1996, and $1,428,000 in revenues from the
Endress + Hauser product line, which was purchased in April 1996, as well
as a $410,000 increase in sales in the Far East. These increases were
offset in part by the inclusion of $1,650,000 in revenues in 1995 from
the sale of a large sampling system to a customer in Taiwan; a $2,113,000
decrease in U.S. product revenues due to lower demand resulting from a
reduction in capital spending by major food suppliers, caused by higher
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THERMO SENTRON INC.
First Nine Months 1996 Compared With First Nine Months 1995 (continued)
grain prices and breakfast cereal price wars; and a $786,000 decline in
revenues due to the sale of a product line to Thermo Instrument Systems
Inc. (Thermo Instrument) in 1995. Thermo Instrument is a majority-owned
subsidiary of Thermo Electron Corporation (Thermo Electron).
The gross profit margin increased to 40% in the first nine months
of 1996 from 39% in the first nine months of 1995 primarily due to the
reason discussed in the results of operations for the third quarter.
Selling, general and administrative expenses as a percentage of
revenues increased to 27% in the first nine months of 1996 from 26% in
the first nine months of 1995 for the reasons discussed in the results of
operations for the third quarter. Research and development expenses as a
percentage of revenues were unchanged at 2.8% in the first nine months of
1996 and 1995.
Interest income increased to $965,000 in the first nine months of
1996 from $109,000 in the first nine months of 1995, primarily due to
interest income earned on the invested proceeds from the Company's April
1996 initial public offering of common stock. Interest expense decreased
to $490,000 in the first nine months of 1996 from $676,000 in the first
nine months of 1995 for the reasons discussed in the results of
operations for the third quarter.
The effective tax rate was 38% in the first nine months of 1996 and
1995. The effective tax rate exceeded the statutory federal income tax
rate due primarily to the impact of state income taxes and foreign tax
rate and tax law differences.
Liquidity and Capital Resources
Working capital was $38,380,000 at September 28, 1996, compared
with negative $853,000 at December 30, 1995. Included in working capital
are cash, cash equivalents, and available-for-sale investments of
$33,243,000 at September 28, 1996, compared with $3,012,000 at December
30, 1995.
During the first nine months of 1996, $1,185,000 of cash was
provided by operating activities. Cash flow from operating activities was
primarily affected by an increase in accounts receivable. Accounts
receivable increased due to a significant portion of third quarter sales
occurring in September 1996, as well as a high level of cash receipts in
December 1995, which resulted in lower outstanding accounts receivable at
year end.
In January 1996, the Company acquired Hitech for approximately $4.5
million in cash. In April 1996, the Company purchased the solids
flow-measurement product line of Endress + Hauser for approximately $4.4
million in cash. The Hitech acquisition was financed with a credit
facility denominated in British pounds sterling, and the product line
purchase was financed with an advance from Thermo Electron, both of which
were repaid in April 1996.
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THERMO SENTRON INC.
Liquidity and Capital Resources (continued)
In April 1996, the Company sold 2,875,000 shares of its common
stock in an initial public offering for net proceeds of approximately
$42.3 million (Note 2). The Company used part of the proceeds to repay
approximately $12.6 million in short-term borrowings from Thermo Electron
and third parties.
During the first nine months of 1996, the Company expended $639,000
for property, plant and equipment. In the remainder of 1996, the Company
expects to make capital expenditures of approximately $300,000. Although
the Company expects to have positive cash flow from its existing
operations, the Company anticipates it may require significant amounts of
cash to pursue the acquisition of complementary businesses. The Company
expects that it would seek to finance any such acquisitions through a
combination of internal funds, additional equity financing or convertible
debt financing from the capital markets and/or short-term borrowings from
Thermedics Inc. or Thermo Electron. The Company believes that its
existing resources are sufficient to meet the capital requirements of its
existing businesses for the foreseeable future.
PART II - OTHER INFORMATION
Item 5 - Other Information
In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, the Company wishes to caution
readers that the following important factors, among others, in some cases
have affected, and in the future could affect, the Company's actual
results and could cause its actual results in 1996 and beyond to differ
materially from those expressed in any forward-looking statements made
by, or on behalf of, the Company.
Risks Associated With Acquisition Strategy. The Company's strategy
includes the acquisition of businesses and technologies that complement
or augment the Company's existing product lines. Promising acquisitions
are difficult to identify and complete for a number of reasons, including
competition among prospective buyers and the need for regulatory
approval, including antitrust approvals. There can be no assurance that
the Company will be able to complete future acquisitions or that the
Company will be able to successfully integrate any acquired business. In
order to finance such acquisitions, it may be necessary for the Company
to raise additional funds through public or private financings. Any
equity or debt financing, if available at all, may be on terms which are
not favorable to the Company and, in the case of equity financing, may
result in dilution to the Company's stockholders.
International Operations. Sales outside the United States accounted
for more than 55% of the Company's total revenues in each of the last
three years. The Company intends to continue to expand its presence in
international markets. International revenues are subject to a number of
risks, including the following: agreements may be difficult to enforce
and receivables difficult to collect through a foreign country's legal
system; foreign customers may have longer payment cycles; foreign
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THERMO SENTRON INC.
Item 5 - Other Information (continued)
countries may impose additional withholding taxes or otherwise tax the
Company's foreign income, impose tariff, or adopt other restrictions on
foreign trade; fluctuations in exchange rates may affect product demand
and adversely affect the profitability in U.S. dollars of products and
services provided by the Company in foreign markets where payment for the
Company's products and services is made in the local currency; U.S.
export licenses may be difficult to obtain; and the protection of
intellectual property in foreign countries may be more difficult to
enforce. There can be no assurance that any of these factors will not
have a material adverse effect on the Company's business and results of
operations.
Government Regulations and Approvals. The market for certain of the
Company's products, both in the United States and abroad, is subject to
or influenced by various domestic and foreign clean air and consumer
protection laws. The Company designs, develops, and markets its products
to meet customer needs created by existing and anticipated regulations,
and any changes in these regulations may adversely affect consumer demand
for the Company's products. In addition, the marketing of certain of the
Company's products is dependent upon the receipt of regulatory and other
approvals, including industry association approvals of the design,
construction and accuracy of the Company's products. Delays in obtaining,
or the failure to obtain, any such approvals could have a material
adverse effect on the Company's business and results of operations.
Competition. The Company encounters and expects to continue to
encounter intense competition in the sale of its products. The Company
believes that the principal competitive factors affecting the market for
precision-weighing and inspection equipment include customer service and
support, quality and reliability, price, accuracy, ease of use,
distribution channels, technical features, compatibility with customers'
manufacturing processes, and regulatory approvals. Certain of the
Company's competitors have greater resources, manufacturing and marketing
capabilities, technical staff, and production facilities than those of
the Company. As a result, they may be able to adapt more quickly to new
or emerging technologies and changes in customer requirements, or to
devote greater resources to the promotion and sale of their products than
can the Company. Competition could increase if new companies enter the
market or if existing competitors expand their product lines.
Technological Change and New Products. The market for precision-
weighing and inspection equipment is characterized by changing
technology, evolving industry standards, and new product introductions.
The Company's future success will depend in part upon its ability to
enhance its existing products and to develop and introduce new products
and technologies to meet changing customer requirements. The Company is
currently devoting significant resources toward the enhancement of its
existing products and the development of new products and technologies.
There can be no assurance that the Company will successfully complete the
enhancement and development of these products in a timely fashion or that
the Company's current or future products will satisfy the needs of the
precision-weighing and inspection equipment market.
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THERMO SENTRON INC.
Item 5 - Other Information (continued)
Potential Fluctuations in Quarterly Performance. The Company's
quarterly operating results may vary significantly depending on a number
of factors, including the size, timing, and shipment of individual
orders, seasonality of revenue, foreign currency exchange rates, the mix
of products sold and general economic conditions. Because the Company's
operating expenses are based on anticipated revenue levels and a high
percentage of the Company's expenses are fixed for the short term, a
small variation in the timing of recognition of revenue can cause
significant variations in operating results from quarter to quarter.
Item 6 - Exhibits
See Exhibit Index on the page immediately preceding exhibits.
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THERMO SENTRON INC.
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 4th day of November
1996.
THERMO SENTRON INC.
Paul F. Kelleher
--------------------
Paul F. Kelleher
Chief Accounting Officer
John N. Hatsopoulos
--------------------
John N. Hatsopoulos
Chief Financial Officer
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THERMO SENTRON INC.
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
------------------------------------------------------------------------
10.1 Stock Holdings Assistance Plan and Form of
Promissory Note.
11 Statement re: Computation of earnings per share.
27 Financial Data Schedule.
EXHIBIT 10.1
THERMO SENTRON INC.
STOCK HOLDINGS ASSISTANCE PLAN
SECTION 1. Purpose.
The purpose of this Plan is to benefit Thermo Sentron Inc.
(the "Company") and its stockholders by encouraging Key Employees
to acquire and maintain share ownership in the Company, by
increasing such employees' proprietary interest in promoting the
growth and performance of the Company and its subsidiaries and by
providing for the implementation of the Guidelines.
SECTION 2. Definitions.
The following terms, when used in the Plan, shall have the
meanings set forth below:
Committee: The Human Resources Committee of the Board of
Directors of the Company as appointed from time to time.
Common Stock: The common stock of the Company and any
successor thereto.
Company: Thermo Sentron Inc., a Delaware corporation.
Guidelines: The Stock Holdings Guidelines for Key Employees
of the Company, as established by the Committee from time to
time.
Key Employee: Any employee of the Company or any of its
subsidiaries, including any officer or member of the Board of
Directors who is also an employee, as designated by the
Committee, and who, in the judgment of the Committee, will be in
a position to contribute significantly to the attainment of the
Company's strategic goals and long-term growth and prosperity.
Loans: Loans extended to Key Employees by the Company
pursuant to this Plan.
Plan: The Thermo Sentron Inc. Stock Holdings Assistance
Plan, as amended from time to time.
SECTION 3. Administration.
The Plan and the Guidelines shall be administered by the
Committee, which shall have authority to interpret the Plan and
the Guidelines and, subject to their provisions, to prescribe,
amend and rescind any rules and regulations and to make all other
determinations necessary or desirable for the administration
thereof. The Committee's interpretations and decisions with
regard to the Plan and the Guidelines and such rules and
regulations as may be established thereunder shall be final and
conclusive. The Committee may correct any defect or supply any
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omission or reconcile any inconsistency in the Plan or the
Guidelines, or in any Loan in the manner and to the extent the
Committee deems desirable to carry it into effect. No member of
the Committee shall be liable for any action or omission in
connection with the Plan or the Guidelines that is made in good
faith.
SECTION 4. Loans and Loan Limits.
The Committee has determined that the provision of Loans
from time to time to Key Employees in such amounts as to cause
such Key Employees to comply with the Guidelines is, in the
judgment of the Committee, reasonably expected to benefit the
Company and authorizes the Company to extend Loans from time to
time to Key Employees in such amounts as may be requested by such
Key Employees in order to comply with the Guidelines. Such Loans
may be used solely for the purpose of acquiring Common Stock
(other than upon the exercise of stock options or under employee
stock purchase plans) in open market transactions or from the
Company.
Each Loan shall be full recourse and evidenced by a
non-interest bearing promissory note substantially in the form
attached hereto as Exhibit A (the "Note") and maturing in
accordance with the provisions of Section 6 hereof, and
containing such other terms and conditions, which are not
inconsistent with the provisions of the Plan and the Guidelines,
as the Committee shall determine in its sole and absolute
discretion.
SECTION 5. Federal Income Tax Treatment of Loans.
For federal income tax purposes, interest on Loans shall be
imputed on any interest free Loan extended under the Plan. A Key
Employee shall be deemed to have paid the imputed interest to the
Company and the Company shall be deemed to have paid said imputed
interest back to the Key Employee as additional compensation.
The deemed interest payment shall be taxable to the Company as
income, and may be deductible to the Key Employee to the extent
allowable under the rules relating to investment interest. The
deemed compensation payment to the Key Employee shall be taxable
to the employee and deductible to the Company, but shall also be
subject to employment taxes such as FICA and FUTA.
SECTION 6. Maturity of Loans.
Each Loan to a Key Employee hereunder shall be due and
payable on demand by the Company. If no such demand is made,
then each Loan shall mature and the principal thereof shall
become due and payable in five equal annual installments
commencing on the first anniversary date of the making of such
Loan. Each Loan shall also become immediately due and payable in
full, without demand, upon the occurrence of any of the events
set forth in the Note; provided that the Committee may, in its
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sole and absolute discretion, authorize an extension of the time
for repayment of a Loan upon such terms and conditions as the
Committee may determine.
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SECTION 7. Amendment and Termination of the Plan.
The Committee may from time to time alter or amend the Plan
or the Guidelines in any respect, or terminate the Plan or the
Guidelines at any time. No such amendment or termination,
however, shall alter or otherwise affect the terms and conditions
of any Loan then outstanding to Key Employee without such Key
Employee's written consent, except as otherwise provided herein
or in the promissory note evidencing such Loan.
SECTION 8. Miscellaneous Provisions.
(a) No employee or other person shall have any claim or
right to receive a Loan under the Plan, and no employee shall
have any right to be retained in the employ of the Company due to
his or her participation in the Plan.
(b) No Loan shall be made hereunder unless counsel for the
Company shall be satisfied that such Loan will be in compliance
with applicable federal, state and local laws.
(c) The expenses of the Plan shall be borne by the Company.
(d) The Plan shall be unfunded, and the Company shall not
be required to establish any special or separate fund or to make
any other segregation of assets to assure the making of any Loan
under the Plan.
(e) Except as otherwise provided in Section 7 hereof, by
accepting any Loan under the Plan, each Key Employee shall be
conclusively deemed to have indicated his acceptance and
ratification of, and consent to, any action taken under the Plan
or the Guidelines by the Company, the Board of Directors of the
Company or the Committee.
(f) The appropriate officers of the Company shall cause to
be filed any reports, returns or other information regarding
Loans hereunder, as may be required by any applicable statute,
rule or regulation.
SECTION 9. Effective Date.
The Plan and the Guidelines shall become effective upon
approval and adoption by the Committee.
4PAGE
<PAGE>
EXHIBIT A
THERMO SENTRON INC.
Promissory Note
$_________
Dated:____________
For value received, ________________, an individual whose
residence is located at _______________________ (the "Employee"),
hereby promises to pay to Thermo Sentron Inc. (the "Company"), or
assigns, ON DEMAND, but in any case on or before [insert date
which is the fifth anniversary of date of issuance] (the
"Maturity Date"), the principal sum of [loan amount in words]
($_______), or such part thereof as then remains unpaid, without
interest. Principal shall be payable in lawful money of the
United States of America, in immediately available funds, at the
principal office of the Company or at such other place as the
Company may designate from time to time in writing to the
Employee.
Unless the Company has already made a demand for payment in
full of this Note, the Employee agrees to repay the Company, on
each of the first four anniversary dates of the date hereof, an
amount equal to 20% of the initial principal amount of the Note.
Payment of the final 20% of the initial principal amount, if no
demand has been made by the Company, shall be due and payable on
the Maturity Date.
This Note may be prepaid at any time or from time to time,
in whole or in part, without any premium or penalty. The
Employee acknowledges and agrees that the Company has advanced to
the Employee the principal amount of this Note pursuant to the
Company's Stock Holdings Assistance Plan, and that all terms and
conditions of such Plan are incorporated herein by reference.
The unpaid principal amount of this Note shall be and become
immediately due and payable without notice or demand, at the
option of the Company, upon the occurrence of any of the
following events:
(a) the termination of the Employee's employment with
the Company, with or without cause, for any reason or for no
reason;
(b) the death or disability of the Employee;
(c) the failure of the Employee to pay his or her
debts as they become due, the insolvency of the Employee,
5PAGE
<PAGE>
the filing by or against the Employee of any petition under
the United States Bankruptcy Code (or the filing of any
similar petition under the insolvency law of any
jurisdiction), or the making by the Employee of an
assignment or trust mortgage for the benefit of creditors or
the appointment of a receiver, custodian or similar agent
with respect to, or the taking by any such person of
possession of, any property of the Employee; or
(d) the issuance of any writ of attachment, by trustee
process or otherwise, or any restraining order or injunction
not removed, repealed or dismissed within thirty (30) days
of issuance, against or affecting the person or property of
the Employee or any liability or obligation of the Employee
to the Company.
In case any payment herein provided for shall not be paid
when due, the Employee further promises to pay all costs of
collection, including all reasonable attorneys' fees.
No delay or omission on the part of the Company in
exercising any right hereunder shall operate as a waiver of such
right or of any other right of the Company, nor shall any delay,
omission or waiver on any one occasion be deemed a bar to or
waiver of the same or any other right on any future occasion.
The Employee hereby waives presentment, demand, notice of
prepayment, protest and all other demands and notices in
connection with the delivery, acceptance, performance, default or
enforcement of this Note. The undersigned hereby assents to any
indulgence and any extension of time for payment of any
indebtedness evidenced hereby granted or permitted by the
Company.
This Note has been made pursuant to the Company's Stock
Holdings Assistance Plan and shall be governed by and construed
in accordance with, such Plan and the laws of the State of
Delaware and shall have the effect of a sealed instrument.
_______________________________
Employee Name: _________________
________________________
Witness
Exhibit 11
THERMO SENTRON INC.
Computation of Earnings per Share
Three Months Ended Nine Months Ended
------------------------ ------------------------
Sept. 28, Sept. 30, Sept. 28, Sept. 30,
1996 1995 1996 1995
- -------------------------------------------------------------------------------
Computation of Primary
Earnings per Share:
Net Income (a) $1,346,000 $1,004,000 $3,548,000 $2,832,000
---------- ---------- ---------- ----------
Shares:
Weighted average shares
outstanding 9,875,000 7,000,000 8,907,051 7,000,000
Add: Shares issuable
from assumed
exercise of
options (as
determined by
the application
of the treasury
stock method) - 27,000 9,000 27,000
---------- ---------- ---------- ----------
Weighted average
shares outstanding,
as adjusted (b) 9,875,000 7,027,000 8,916,051 7,027,000
---------- ---------- ---------- ----------
Primary Earnings per
Share (a) / (b) $ .14 $ .14 $ .40 $ .40
========== ========== ========== ==========
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
SENTRON INC.'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 28,
1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> SEP-28-1996
<CASH> 26,556
<SECURITIES> 6,687
<RECEIVABLES> 18,313
<ALLOWANCES> 2,046
<INVENTORY> 10,725
<CURRENT-ASSETS> 61,723
<PP&E> 3,484
<DEPRECIATION> 1,473
<TOTAL-ASSETS> 104,506
<CURRENT-LIABILITIES> 23,343
<BONDS> 0
0
0
<COMMON> 99
<OTHER-SE> 80,728
<TOTAL-LIABILITY-AND-EQUITY> 104,506
<SALES> 51,546
<TOTAL-REVENUES> 51,546
<CGS> 30,931
<TOTAL-COSTS> 30,931
<OTHER-EXPENSES> 1,454
<LOSS-PROVISION> 286
<INTEREST-EXPENSE> 490
<INCOME-PRETAX> 5,722
<INCOME-TAX> 2,174
<INCOME-CONTINUING> 3,548
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,548
<EPS-PRIMARY> .40
<EPS-DILUTED> 0
</TABLE>
