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 March 29, 1997.
[ ] 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 April 25, 1997
---------------------------- ------------------------------
Common Stock, $.01 par value 9,875,000
PAGE
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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
THERMO SENTRON INC.
Consolidated Balance Sheet
(Unaudited)
Assets
March 29, December 28,
(In thousands) 1997 1996
------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents $ 27,498 $ 28,226
Available-for-sale investments, at quoted
market value (amortized cost of $6,679
and $6,582) 6,681 6,594
Accounts receivable, less allowances
of $1,667 and $1,812 17,000 17,296
Inventories:
Raw materials 3,988 4,126
Work in process 2,160 2,550
Finished goods 4,471 4,951
Prepaid expenses and income taxes 2,459 2,118
-------- --------
64,257 65,861
-------- --------
Property, Plant, and Equipment, at Cost 3,680 3,576
Less: Accumulated depreciation and
amortization 1,598 1,487
-------- --------
2,082 2,089
-------- --------
Other Assets 4,066 3,522
-------- --------
Cost in Excess of Net Assets of Acquired
Companies (Note 2) 36,498 35,714
-------- --------
$106,903 $107,186
======== ========
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THERMO SENTRON INC.
Consolidated Balance Sheet (continued)
(Unaudited)
Liabilities and Shareholders' Investment
March 29, December 28,
(In thousands except share amounts) 1997 1996
------------------------------------------------------------------------
Current Liabilities:
Notes payable $ 3,699 $ 3,596
Accounts payable 6,052 6,898
Accrued payroll and employee benefits 3,809 4,056
Accrued income taxes 2,516 2,686
Customer deposits 1,700 1,936
Accrued commissions 1,303 1,223
Other accrued expenses 3,134 3,309
Due to affiliated companies 861 763
-------- --------
23,074 24,467
-------- --------
Deferred Income Taxes 354 354
-------- --------
Shareholders' Investment:
Common stock, $.01 par value, 30,000,000
shares authorized; 9,875,000 shares issued
and outstanding 99 99
Capital in excess of par value 77,072 77,072
Retained earnings 6,500 5,152
Cumulative translation adjustment (197) 34
Net unrealized gain on available-for-sale
investments 1 8
-------- --------
83,475 82,365
-------- --------
$106,903 $107,186
======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
3PAGE
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THERMO SENTRON INC.
Consolidated Statement of Income
(Unaudited)
Three Months Ended
-----------------------
March 29, March 30,
(In thousands except per share amounts) 1997 1996
-----------------------------------------------------------------------
Revenues $17,981 $16,697
------- -------
Costs and Operating Expenses:
Cost of revenues 11,085 10,246
Selling, general, and administrative expenses 4,723 4,503
Research and development expenses 436 560
------- -------
16,244 15,309
------- -------
Operating Income 1,737 1,388
Interest Income 505 20
Interest Expense (68) (222)
Other Income - 51
------- -------
Income Before Provision for Income Taxes 2,174 1,237
Provision for Income Taxes 826 495
------- -------
Net Income $ 1,348 $ 742
======= =======
Earnings per Share $ .14 $ .11
======= =======
Weighted Average Shares 9,875 7,027
======= =======
The accompanying notes are an integral part of these consolidated
financial statements.
4PAGE
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THERMO SENTRON INC.
Consolidated Statement of Cash Flows
(Unaudited)
Three Months Ended
-----------------------
March 29, March 30,
(In thousands) 1997 1996
------------------------------------------------------------------------
Operating Activities:
Net income $ 1,348 $ 742
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 364 459
Provision for losses on accounts
receivable 32 37
Changes in current accounts,
excluding the effects of
acquisitions:
Accounts receivable (328) (1,585)
Inventories 570 (474)
Other current assets (463) (551)
Accounts payable (641) (763)
Other current liabilities (755) (312)
-------- --------
Net cash provided by (used in) operating
activities 127 (2,447)
-------- --------
Investing Activities:
Acquisitions, net of cash acquired (Note 2) (1,082) (4,355)
Purchases of property, plant, and equipment (132) (211)
Increase in other assets - (2,671)
Other 33 95
-------- --------
Net cash used in investing activities (1,181) (7,142)
-------- --------
Financing Activities:
Net increase in short-term borrowings 280 4,074
Net increase in related party borrowings - 4,519
Repayment of long-term obligation - (273)
-------- --------
Net cash provided by financing activities 280 8,320
-------- --------
Exchange Rate Effect on Cash 46 130
-------- --------
Decrease in Cash and Cash Equivalents (728) (1,139)
Cash and Cash Equivalents at Beginning of
Period 28,226 3,012
-------- --------
Cash and Cash Equivalents at End of Period $ 27,498 $ 1,873
======== ========
5PAGE
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THERMO SENTRON INC.
Consolidated Statement of Cash Flows (continued)
(Unaudited)
Three Months Ended
-----------------------
March 29, March 30,
(In thousands) 1997 1996
-----------------------------------------------------------------------
Noncash Activities:
Fair value of assets of acquired company $ 1,291 $ 6,480
Cash paid for acquired company (1,082) (4,496)
-------- --------
Liabilities assumed of acquired company $ 209 $ 1,984
======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
6PAGE
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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 March
29, 1997, the results of operations for the three-month periods ended
March 29, 1997, and March 30, 1996, and the cash flows for the
three-month periods ended March 29, 1997, and March 30, 1996. Interim
results are not necessarily indicative of results for a full year.
The consolidated balance sheet presented as of December 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, as amended, for the fiscal year ended December 28,
1996, filed with the Securities and Exchange Commission.
2. Acquisition
In February 1997, the Company acquired substantially all of the
assets of RCC Industrial Electronics Pty. Limited (RCCI) for $1.1 million
in cash and the assumption of certain liabilities. RCCI is an
Australian-based manufacturer of in-motion checkweighers for the food and
pharmaceutical industries and had revenues in 1996 of $1.4 million.
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 $866,000, 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.
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
7PAGE
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THERMO SENTRON INC.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
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, as amended,
for the fiscal year ended December 28, 1996, filed with the Securities
and Exchange Commission.
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 to customers in
the food-processing, pharmaceutical, mail-order, and other diverse
industries. The Company's bulk-materials product line includes
conveyor-belt scales, solid-level measurement and conveyor-monitoring
devices, and sampling systems. These products are sold primarily to
customers in the mining and materials-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 export sales 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 affecting the relationship between
the U.S. dollar and foreign currencies. The Company expects an increase
in the percentage of its revenues derived from international operations
during the next twelve months.
Results of Operations
First Quarter 1997 Compared With First Quarter 1996
Revenues were $18.0 million in the first quarter of 1997, compared
with $16.7 million in the first quarter of 1996, an increase of $1.3
million. Revenues decreased $350,000 due to a stronger U.S. dollar
relative to currencies in foreign countries in which the Company
operates. The increase in revenues primarily reflects the inclusion of
$966,000 in revenues from the solids-flow measurement product line,
purchased from Endress + Hauser, Inc. in April 1996, and RCC Industrial
Pty. Limited (RCCI), acquired in February 1997 (Note 2). Excluding the
impact of acquisitions and foreign exchange, revenues increased $668,000,
primarily due to increased demand for products in the packaged-goods
line.
The gross profit margin was relatively unchanged at 38.4% in the
first quarter of 1997, compared with 38.6% in the first quarter of 1996.
8PAGE
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THERMO SENTRON INC.
First Quarter 1997 Compared With First Quarter 1996 (continued)
Selling, general, and administrative expenses as a percentage of
revenues decreased slightly to 26% in the first quarter of 1997 from 27%
in the first quarter of 1996, primarily due to increased revenues.
Research and development expenses as a percentage of revenues decreased
to 2.4% in 1997 from 3.4% in 1996, primarily due to costs incurred to
complete the Company's new electronic control package during the first
quarter of 1996.
Interest income increased to $505,000 in the first quarter of 1997
from $20,000 in the first quarter of 1996, 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
$68,000 in 1997 from $222,000 in 1996, primarily due to the 1996
repayment of a note payable and reduction in short-term borrowings.
The effective tax rate was 38% in the first quarter of 1997, compared
with 40% in the first quarter of 1996. The effective tax rate used in the
first quarter of 1997 is the same effective tax rate applicable to the
full year for fiscal 1996. The effective tax rates exceeded the statutory
federal income tax rate primarily due to the impact of state income taxes
and foreign tax rate and tax law differences.
Liquidity and Capital Resources
Consolidated working capital was $41.2 million at March 29, 1997,
compared with $41.4 million at December 28, 1996. Included in working
capital are cash, cash equivalents, and available-for-sale investments of
$34.2 million at March 29, 1997, compared with $34.8 at December 28,
1996. During the first quarter of 1997, operating activities provided
$127,000 of cash. The Company used $1.4 million of cash in 1997 to reduce
current liabilities, including $641,000 for accounts payable.
During the first quarter of 1997, the Company used $1.2 million for
investing activities. In February 1997, the Company acquired
substantially all of the assets of RCCI for $1.1 million in cash and the
assumption of certain liabilities (Note 2). The acquisition was funded
with available cash. The Company expended $132,000 for property, plant,
and equipment during the first quarter of 1997 and expects to make
capital expenditures of approximately $900,000 in the remainder of 1997.
Although the Company expects to have positive cash flow from its
existing operations, the Company may require significant amounts of cash
for the acquisition of complementary businesses. The Company expects that
it will finance any such acquisition through a combination of internal
funds, additional debt or equity financing from the capital markets, or
short-term borrowings from Thermedics Inc. or Thermo Electron, although
it has no agreement with these companies to ensure that funds will be
available on acceptable terms or at all. The Company believes that its
existing resources are sufficient to meet the capital requirements of its
existing businesses for the foreseeable future.
9PAGE
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THERMO SENTRON INC.
PART II - OTHER INFORMATION
Item 6 - Exhibits
See Exhibit Index on the page immediately preceding exhibits.
10PAGE
<PAGE>
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 5th day of May 1997.
THERMO SENTRON INC.
Paul F. Kelleher
--------------------
Paul F. Kelleher
Chief Accounting Officer
John N. Hatsopoulos
--------------------
John N. Hatsopoulos
Vice President and Chief
Financial Officer
11PAGE
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THERMO SENTRON INC.
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------------------------------------------------------------------------
11 Statement re: Computation of Earnings per Share.
27 Financial Data Schedule.
Exhibit 11
THERMO SENTRON INC.
Computation of Earnings per Share
Three Months Ended
-------------------------
March 29, March 30,
1997 1996
-----------------------------------------------------------------------
Computation of Primary Earnings per Share:
Net Income (a) $1,348,000 $ 742,000
---------- ----------
Shares:
Weighted average shares outstanding 9,875,000 7,000,000
Add: Shares issuable from assumed
exercise of options (as
determined by the application
of the treasury stock method) - 27,000
---------- ----------
Weighted average shares outstanding,
as adjusted (b) 9,875,000 7,027,000
---------- ----------
Primary Earnings per Share (a) / (b) $ .14 $ .11
========== ==========
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
SENTRON CORPORATION'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH
29, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-END> MAR-29-1997
<CASH> 27,498
<SECURITIES> 6,681
<RECEIVABLES> 18,667
<ALLOWANCES> 1,667
<INVENTORY> 10,619
<CURRENT-ASSETS> 64,257
<PP&E> 3,680
<DEPRECIATION> 1,598
<TOTAL-ASSETS> 106,903
<CURRENT-LIABILITIES> 23,074
<BONDS> 0
0
0
<COMMON> 99
<OTHER-SE> 83,376
<TOTAL-LIABILITY-AND-EQUITY> 106,903
<SALES> 17,981
<TOTAL-REVENUES> 17,981
<CGS> 11,085
<TOTAL-COSTS> 11,085
<OTHER-EXPENSES> 436
<LOSS-PROVISION> 32
<INTEREST-EXPENSE> 68
<INCOME-PRETAX> 2,174
<INCOME-TAX> 826
<INCOME-CONTINUING> 1,348
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,348
<EPS-PRIMARY> .14
<EPS-DILUTED> 0
</TABLE>
