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 1-12137
THERMO FIBERGEN INC.
(Exact name of Registrant as specified in its charter)
Delaware 04-3311544
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8 Alfred Circle
Bedford, Massachusetts 01730
(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 14,715,000
PAGE
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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
THERMO FIBERGEN INC.
Consolidated Balance Sheet
(Unaudited)
Assets
March 29, December 28,
(In thousands) 1997 1996
-----------------------------------------------------------------------
Current Assets:
Cash and cash equivalents $58,792 $58,388
Accounts receivable, less allowance of $30
in 1997 and 1996 933 738
Inventories 308 312
Other current assets 69 64
------- -------
60,102 59,502
------- -------
Property, Plant, and Equipment, at Cost 6,490 6,359
Less: Accumulated depreciation and amortization 749 538
------- -------
5,741 5,821
------- -------
Other Assets 948 969
------- -------
Cost in Excess of Net Assets of Acquired
Company 4,680 4,741
------- -------
$71,471 $71,033
======= =======
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THERMO FIBERGEN INC.
Consolidated Balance Sheet (continued)
(Unaudited)
Liabilities and Shareholders' Investment
March 29, December 28,
(In thousands except share amounts) 1997 1996
-----------------------------------------------------------------------
Current Liabilities:
Accounts payable $ 293 $ 429
Accrued payroll and employee benefits 183 181
Other accrued liabilities 709 649
Due to parent company and affiliated
companies 1,764 1,766
------- -------
2,949 3,025
------- -------
Common Stock Subject to Redemption ($60,116
redemption value), 4,715,000 shares issued
and outstanding 56,359 56,087
------- -------
Shareholders' Investment:
Common stock, $.01 par value, 25,000,000
shares authorized; 10,000,000 shares
issued and outstanding 100 100
Capital in excess of par value 11,969 12,094
Retained earnings (accumulated deficit) 94 (273)
------- -------
12,163 11,921
------- -------
$71,471 $71,033
======= =======
The accompanying notes are an integral part of these consolidated
financial statements.
3PAGE
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THERMO FIBERGEN INC.
Consolidated Statement of Operations
(Unaudited)
Three Months Ended
------------------------
March 29, March 30,
(In thousands except per share amounts) 1997 1996
-----------------------------------------------------------------------
Revenues $ 1,526 $ -
------- -------
Costs and Operating Expenses:
Cost of revenues 802 -
Selling, general, and administrative expenses 759 -
Research and development expenses 453 203
------- -------
2,014 203
------- -------
Operating Loss (488) (203)
Interest Income 855 99
------- -------
Income (Loss) Before Income Taxes 367 (104)
Income Taxes - -
------- -------
Net Income (Loss) $ 367 $ (104)
======= =======
Earnings (Loss) per Share $ .02 $ (.01)
======= =======
Weighted Average Shares 17,399 10,073
======= =======
The accompanying notes are an integral part of these consolidated
financial statements.
4PAGE
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THERMO FIBERGEN INC.
Consolidated Statement of Cash Flows
(Unaudited)
Three Months Ended
------------------------
March 29, March 30,
(In thousands) 1997 1996
------------------------------------------------------------------------
Operating Activities:
Net income (loss) $ 367 $ (104)
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization 293 -
Changes in current accounts:
Accounts receivable (195) -
Inventories 4 -
Other current assets (5) -
Accounts payable (136) -
Other current liabilities 62 -
-------- --------
Net cash provided by (used in) operating
activities 390 (104)
-------- --------
Investing Activities:
Purchases of property, plant, and equipment (131) (6)
-------- --------
Net cash used in investing activities (131) (6)
-------- --------
Financing Activities:
Cash transfer from parent company in
connection with capitalization of
the Company - 12,500
Transfer from parent company prior to
capitalization of the Company - 94
Increase in due to parent company and
affiliated companies 145 16
-------- --------
Net cash provided by financing activities 145 12,610
-------- --------
Increase in Cash and Cash Equivalents 404 12,500
Cash and Cash Equivalents at Beginning
of Period 58,388 -
-------- --------
Cash and Cash Equivalents at End of Period $ 58,792 $ 12,500
======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
5PAGE
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THERMO FIBERGEN INC.
Notes to Consolidated Financial Statements
1. General
The interim consolidated financial statements presented have been
prepared by Thermo Fibergen 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, and the results of operations and 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 for the fiscal year ended December 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 December 28, 1996, filed with the Securities and Exchange
Commission.
Overview
The Company is developing and commercializing equipment and systems
to recover materials from papermaking sludge generated by plants that
produce virgin and recycled pulp and paper. Through its GranTek Inc.
(GranTek) subsidiary, acquired in July 1996, the Company employs patented
technology to produce absorbing granules from papermaking sludge. These
granules, marketed under the trade name Biodac(R), are currently used as
a carrier to deliver agricultural chemicals for professional turf, home
lawn and garden, and mosquito control applications.
6PAGE
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THERMO FIBERGEN INC.
Overview (continued)
The Company currently intends to limit the pace and amount of its
research and development on both its fiber-recovery system and on new
products, if any, that may be developed from recovered fibers and other
components of papermaking sludge, so that its internally funded research
and development expenditures will be approximately equivalent to the
interest or dividend income earned on its cash balances, plus the
Company's operating earnings before research and development expenses, if
any.
Results of Operations
First Quarter 1997 Compared With First Quarter 1996
Revenues of $1,526,000 for the first quarter of 1997 represent
revenues from GranTek, acquired in July 1996.
The gross profit margin was 47% in the first quarter of 1997.
Selling, general, and administrative expenses as a percentage of
revenues were 50% in the first quarter of 1997.
Research and development expenses increased to $453,000 in the first
quarter of 1997 from $203,000 in the first quarter of 1996. This increase
was primarily due to the acceleration of the Company's research and
development efforts associated with the Company's fiber-recovery system,
expenditures on research and development relating to the extraction and
purification of minerals, and the inclusion of $117,000 of expenses at
GranTek. The Company expects that its spending on research and
development will continue to increase over amounts incurred in 1996.
Interest income increased to $855,000 in the first quarter of 1997
from $99,000 in the first quarter of 1996, primarily due to an increase
in average invested balances resulting from the proceeds from the
Company's September 1996 initial public offering, as well as cash
received in connection with the initial capitalization of the Company in
February 1996.
The Company had no income tax expense in the first quarter of 1997
due to a benefit recorded from the use of net operating loss
carryforwards. The Company has approximately $982,000 of remaining net
operating loss carryforwards at March 29, 1997. When and if such loss
carryforwards are used, the Company will report income tax expense.
Liquidity and Capital Resources
Consolidated working capital was $57,153,000 at March 29, 1997,
compared with $56,477,000 at December 28, 1996. Included in working
capital at March 29, 1997, are cash and cash equivalents of $58,792,000,
compared with $58,388,000 at December 28, 1996.
7PAGE
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THERMO FIBERGEN INC.
Liquidity and Capital Resources (continued)
During the first quarter of 1997, $390,000 of cash was provided by
operating activities. Cash provided by the Company's operating results
was offset in part by an increase in accounts receivable of $195,000 and
a decrease in accounts payable of $136,000.
During the first quarter of 1997, the Company expended $131,000 for
purchases of property, plant, and equipment. Cash provided by financing
activities during the first quarter of 1997 resulted from an increase in
due to parent company and affiliated companies.
The Company's common stock subject to redemption is redeemable by
holders of redemption rights in September 2000 and 2001 for a total
redemption value of $60,116,000. The redemption rights are guaranteed, on
a subordinated basis, by Thermo Electron Corporation.
In the remainder of 1997, the Company plans to make expenditures for
property, plant, and equipment of approximately $320,000. In addition,
the Company may make additional capital expenditures for the construction
of one or more fiber-recovery plants. Construction of fiber-recovery
plants is dependent upon the Company entering into long-term contracts
with paper mills, under which the Company will charge fees to accept the
mills' pulp sludge. The Company does not currently have such agreements
in place nor is there any assurance that the Company will be able to
obtain such contracts. The Company anticipates it will require
significant amounts of cash to complete the commercialization of its
fiber-recovery system. The Company expects to finance commercialization
of its fiber-recovery system through a combination of internal funds,
additional debt or equity financing, and/or short-term borrowings from
Thermo Fibertek and Thermo Electron, although there is no agreement with
Thermo Fibertek or Thermo Electron under which such parties would be
obligated to lend funds to the Company. The Company believes that its
existing resources will be sufficient to meet the Company's capital
requirements for the foreseeable future.
PART II - OTHER INFORMATION
Item 6 - Exhibits
See Exhibit Index on the page immediately preceding exhibits.
8PAGE
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THERMO FIBERGEN 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 2nd day of May 1997.
THERMO FIBERGEN INC.
Paul F. Kelleher
---------------------
Paul F. Kelleher
Chief Accounting Officer
John N. Hatsopoulos
---------------------
John N. Hatsopoulos
Vice President and Chief
Financial Officer
9PAGE
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THERMO FIBERGEN INC.
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
-----------------------------------------------------------------------
11 Statement re: Computation of Earnings (Loss) per Share.
27 Financial Data Schedule.
Exhibit 11
THERMO FIBERGEN INC.
Computation of Earnings (Loss) per Share
Three Months Ended
--------------------------
March 29, March 30,
1997 1996
------------------------------------------------------------------------------
Computation of Primary Earnings (Loss) per Share:
Net Income (Loss) (a) $ 367,000 $ (104,000)
----------- -----------
Shares:
Weighted average shares outstanding 14,715,000 10,000,000
Add: Shares issuable from assumed exercise
of redemption rights (as determined
by the application of the reverse
treasury stock method) 2,683,923 -
Shares issuable from assumed exercise of
options (as determined by the application
of the treasury stock method) - 72,902
----------- -----------
Weighted average shares outstanding,
as adjusted (b) 17,398,923 10,072,902
----------- -----------
Primary Earnings (Loss) per Share (a) / (b) $ .02 $ (.01)
=========== ===========
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
FIBERGEN INC.'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>
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<PP&E> 6,490
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0
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<COMMON> 100
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