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 April 4, 1998.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
Commission File Number 1-13572
THERMO ECOTEK CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 04-3072335
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
245 Winter Street, Suite 300
Waltham, Massachusetts 02154
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (781) 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 May 1, 1998
---------------------------- --------------------------
Common Stock, $.10 par value 24,616,316
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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
-----------------------------
THERMO ECOTEK CORPORATION
Consolidated Balance Sheet
(Unaudited)
Assets
April 4, September 27,
(In thousands) 1998 1997
------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents (includes $35,925
and $69,309 under repurchase agreement
with affiliated company) $ 46,465 $ 83,540
Restricted funds 14,423 20,773
Accounts receivable and unbilled revenues 36,655 33,039
Inventories:
Raw materials and supplies 17,173 11,886
Work in process and finished goods 6,435 2,030
Prepaid income taxes 4,467 4,298
Other current assets 2,748 1,728
-------- --------
128,366 157,294
-------- --------
Property, Plant, and Equipment, at Cost 368,881 328,837
Less: Accumulated depreciation and
amortization 76,033 65,770
-------- --------
292,848 263,067
-------- --------
Due from Parent Company 10,164 10,164
-------- --------
Long-term Available-for-sale Investments,
at Quoted Market Value (amortized cost
of $8,504 in fiscal 1998 and 1997) 14,613 12,497
-------- --------
Restricted Funds 21,457 20,905
-------- --------
Other Assets 19,078 21,378
-------- --------
$486,526 $485,305
======== ========
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THERMO ECOTEK CORPORATION
Consolidated Balance Sheet (continued)
(Unaudited)
Liabilities and Shareholders' Investment
April 4, September 27,
(In thousands except share amounts) 1998 1997
------------------------------------------------------------------------
Current Liabilities:
Current portion of long-term obligations $ 31,308 $ 35,012
Accounts payable 5,482 4,031
Lease obligations payable 1,697 1,736
Accrued interest 2,915 3,524
Other accrued expenses 20,513 21,022
Due to parent company 1,172 1,255
-------- --------
63,087 66,580
-------- --------
Long-term Obligations:
Nonrecourse tax-exempt obligations 37,600 51,800
Subordinated convertible debentures
(includes $68,500 due to parent company
in fiscal 1998 and 1997; Note 6) 122,095 130,648
Capital lease obligations 15,484 22,242
-------- --------
175,179 204,690
-------- --------
Deferred Income Taxes 57,660 49,934
-------- --------
Other Deferred Items 17,825 13,521
-------- --------
Minority Interest 12,262 3,304
-------- --------
Shareholders' Investment:
Common stock, $.10 par value, 50,000,000
shares authorized; 26,616,445 and
25,978,198 shares issued 2,662 2,598
Capital in excess of par value 103,335 95,573
Retained earnings 81,049 67,593
Treasury stock at cost, 2,047,913 and
1,477,250 shares (30,265) (20,872)
Cumulative translation adjustment 6 (52)
Net unrealized gain on available-for-sale
investments 3,726 2,436
-------- --------
160,513 147,276
-------- --------
$486,526 $485,305
======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
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THERMO ECOTEK CORPORATION
Consolidated Statement of Income
(Unaudited)
Three Months Ended
--------------------
April 4, March 29,
(In thousands except per share amounts) 1998 1997
-----------------------------------------------------------------------
Revenues $47,207 $38,674
------- -------
Costs and Operating Expenses:
Cost of revenues (includes $1,443 and
$1,364 to related parties) 33,645 28,881
Selling, general, and administrative expenses
(includes $378 and $387 to related parties) 6,695 5,396
Research and development expenses 792 406
------- -------
41,132 34,683
------- -------
Operating Income 6,075 3,991
Interest Income 830 866
Interest Expense (includes $685 to parent
company in fiscal 1998 and 1997) (3,147) (3,107)
Gain on Issuance of Stock by Subsidiary (Note 4) 2,214 -
Equity in Earnings of Joint Venture 80 152
------- -------
Income Before Provision for Income Taxes and
Minority Interest 6,052 1,902
Provision for Income Taxes 1,283 609
Minority Interest Expense 571 341
------- -------
Net Income $ 4,198 $ 952
======= =======
Earnings per Share (Note 5):
Basic $ .17 $ .04
======= =======
Diluted $ .13 $ .04
======= =======
Weighted Average Shares (Note 5):
Basic 24,509 25,038
======= =======
Diluted 39,067 27,040
======= =======
The accompanying notes are an integral part of these consolidated
financial statements.
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THERMO ECOTEK CORPORATION
Consolidated Statement of Income
(Unaudited)
Six Months Ended
----------------------
April 4, March 29,
(In thousands except per share amounts) 1998 1997
-----------------------------------------------------------------------
Revenues $95,016 $77,188
------- -------
Costs and Operating Expenses:
Cost of revenues (includes $2,966 and $2,605
to related parties) 65,040 55,135
Selling, general, and administrative expenses
(includes $856 and $799 to related parties) 11,672 8,026
Research and development expenses 1,389 569
------- -------
78,101 63,730
------- -------
Operating Income 16,915 13,458
Interest Income 2,370 2,262
Interest Expense (includes $1,370 to parent
company in fiscal 1998 and 1997) (6,768) (6,644)
Gain on Issuance of Stock by Subsidiary (Note 4) 6,269 -
Equity in Earnings of Joint Venture 123 126
------- -------
Income Before Provision for Income Taxes and
Minority Interest 18,909 9,202
Provision for Income Taxes 4,609 3,358
Minority Interest Expense 844 592
------- -------
Net Income $13,456 $ 5,252
======= =======
Earnings per Share (Note 5):
Basic $ .55 $ .21
======= =======
Diluted $ .38 $ .16
======= =======
Weighted Average Shares (Note 5):
Basic 24,460 24,772
======= =======
Diluted 39,261 37,872
======= =======
The accompanying notes are an integral part of these consolidated
financial statements.
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THERMO ECOTEK CORPORATION
Consolidated Statement of Cash Flows
(Unaudited)
Six Months Ended
----------------------
April 4, March 29,
(In thousands) 1998 1997
-----------------------------------------------------------------------
Operating Activities:
Net income $ 13,456 $ 5,252
Adjustments to reconcile net income to net
cash provided by operating activities:
Minority interest expense 844 592
Depreciation and amortization 11,396 10,439
Gain on issuance of stock by subsidiary
(Note 4) (6,269) -
Increase in deferred income taxes 4,599 3,358
Changes in current accounts, excluding
the effect of acquisitions:
Restricted funds 6,350 6,576
Accounts receivable and unbilled
revenues (3,533) 6,244
Inventories (918) (2,343)
Other current assets (1,019) (641)
Accounts payable 1,411 663
Lease obligations payable (302) (301)
Due to parent company (83) (778)
Other current liabilities (1,523) (991)
-------- --------
Net cash provided by operating activities 24,409 28,070
-------- --------
Investing Activities:
Acquisitions, net of cash acquired (Note 3) (19,100) (10,865)
Funding of long-term restricted funds (552) (2,315)
Increase in other deferred items 4,567 2,555
Increase in other assets (270) (2,500)
Purchases of property, plant, and equipment (25,742) (8,190)
-------- --------
Net cash used in investing activities (41,097 (21,315
-------- --------
) )
Financing Activities:
Repayment of long-term obligations (18,400) (16,000)
Payments under capital lease obligations (6,298) (5,842)
Proceeds from issuance of Company and
subsidiary common stock (Note 4) 15,044 771
Purchases of Company common stock (10,248) (879)
Distribution to minority partner (533) (607)
-------- --------
Net cash used in financing activities (20,435) (22,557)
-------- --------
Exchange Rate Effect on Cash 48 (9)
-------- --------
Decrease in Cash and Cash Equivalents (37,075) (15,811)
Cash and Cash Equivalents at Beginning of Period 83,540 63,238
-------- --------
Cash and Cash Equivalents at End of Period $ 46,465 $ 47,427
======== ========
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THERMO ECOTEK CORPORATION
Consolidated Statement of Cash Flows (continued)
(Unaudited)
Six Months Ended
----------------------
April 4, March 29,
(In thousands) 1998 1997
-----------------------------------------------------------------------
Noncash Activities:
Fair value of assets of acquired companies $ 20,025 $ 15,183
Cash paid for acquired companies (19,100) (11,223)
-------- --------
Liabilities assumed of acquired companies $ 925 $ 3,960
======== ========
Conversion of subordinated convertible
debentures $ 8,553 $ 10,467
======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
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THERMO ECOTEK CORPORATION
Notes to Consolidated Financial Statements
1. General
The interim consolidated financial statements presented have been
prepared by Thermo Ecotek 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 April
4, 1998, the results of operations for the three- and six-month periods
ended April 4, 1998, and March 29, 1997, and the cash flows for the
six-month periods ended April 4, 1998, and March 29, 1997. The six-month
periods ending April 4, 1998, and March 29, 1997, include 27 weeks and 26
weeks, respectively. Interim results are not necessarily indicative of
results for a full year.
The consolidated balance sheet presented as of September 27, 1997,
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 27, 1997, filed
with the Securities and Exchange Commission.
2. Presentation
Certain amounts in fiscal 1997 have been reclassified to conform to
the presentation in the fiscal 1998 financial statements.
3. Acquisition
In November 1997, the Company's Thermo Trilogy Corporation subsidiary
acquired the sprayable bacillus thuringiensis (Bt) - biopesticide
business of Novartis AG and its affiliates (the Bt business of Novartis)
for $19.1 million in cash and the assumption of certain liabilities.
This acquisition has been accounted for using the purchase method of
accounting, and the results of operations of the Bt business of Novartis
have been included in the accompanying financial statements from the date
of acquisition. The cost of this acquisition equaled the estimated fair
value of the net assets acquired. Allocation of the purchase price was
based on an estimate of the fair value of the net assets acquired and is
subject to adjustment upon finalization of the purchase-price allocation.
The Company has gathered no information that indicates the final
allocation will differ materially from the preliminary estimate. Based on
unaudited data, the following table presents selected financial
information for the Company and the Bt business of Novartis on a pro
forma basis, assuming that the Bt business of Novartis had been purchased
at the beginning of fiscal 1997.
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THERMO ECOTEK CORPORATION
3. Acquisition (continued)
Three
Months Ended Six Months Ended
------------ --------------------
(In thousands except March 29, April 4, March 29,
per share amounts) 1997 1998 1997
-----------------------------------------------------------------------
Revenues $42,191 $98,249 $86,711
Net income 1,286 13,627 6,160
Earnings per share:
Basic .05 .56 .25
Diluted .05 .39 .18
The pro forma results are not necessarily indicative of future
operations or the actual results that would have occurred had the
acquisition of the Bt business of Novartis been made at the beginning of
fiscal 1997.
4. Issuance of Stock by Subsidiary
At the time a subsidiary sells its stock to unrelated parties at a
price in excess of its book value, the Company's net investment in that
subsidiary increases. If at that time the subsidiary is an operating
entity and not engaged principally in research and development, the
Company records the increase as a gain.
If gains have been recognized on the issuance of a subsidiary's stock
and shares of the subsidiary are subsequently repurchased either by the
subsidiary, the Company, or Thermo Electron Corporation, gain recognition
does not occur on issuances subsequent to the date of a repurchase until
such time as shares have been issued in an amount equivalent to the
number of repurchased shares.
In fiscal 1998, the Company's Thermo Trilogy subsidiary sold
1,942,821 shares of its common stock in private placements at $8.25 per
share for net proceeds of $14.9 million, resulting in a gain of $6.3
million. Following the private placements, the Company owned 80% of
Thermo Trilogy's outstanding common stock.
5. Earnings per Share
During the quarter ended January 3, 1998, the Company adopted
Statement of Financial Accounting Standards No. 128, "Earnings per
Share." As a result, all previously reported earnings per share have been
restated; however, diluted earnings per share equals the Company's
previously reported fully diluted earnings per share for the fiscal 1997
period. Basic earnings per share have been computed by dividing net
income by the weighted average number of shares outstanding during the
period. Diluted earnings per share have been computed assuming the
conversion of convertible obligations and the elimination of the related
interest expense, and the exercise of stock options, as well as their
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THERMO ECOTEK CORPORATION
5. Earnings per Share (continued)
related income tax effects. Basic and diluted earnings per share were
calculated as follows:
Three Months Ended Six Months Ended
-------------------- --------------------
(In thousands except April 4, March 29, April 4, March 29,
per share amounts) 1998 1997 1998 1997
-----------------------------------------------------------------------
Basic
Net income $ 4,198 $ 952 $13,456 $ 5,252
------- ------- ------- -------
Weighted average shares 24,509 25,038 24,460 24,772
------- ------- ------- -------
Basic earnings per share $ .17 $ .04 $ .55 $ .21
======= ======= ======= =======
Diluted
Net income $ 4,198 $ 952 $13,456 $ 5,252
Effect of:
Convertible debentures 790 - 1,579 836
Majority-owned
subsidiary's dilutive
securities (2) - (4) -
------- ------- ------- -------
Income available to
common shareholders,
as adjusted $ 4,986 $ 952 $15,031 6,088
------- ------- ------- ------
$
-
Weighted average shares 24,509 25,038 24,460 24,772
Effect of:
Convertible debentures 14,192 1,586 14,458 12,649
Stock options 366 416 343 451
------- ------- ------- -------
Weighted average shares,
as adjusted 39,067 27,040 39,261 37,872
------- ------- ------- -------
Diluted earnings per
share $ .13 $ .04 $ .38 $ .16
======= ======= ======= =======
The computation of diluted earnings per share excludes the effect of
assuming the exercise of certain outstanding stock options because the
effect would be antidilutive. At April 4, 1998, there were 44,200 of such
options outstanding, with exercise prices ranging from $19.23 to $19.25
per share.
In addition, the computation of diluted earnings per share for the
three months ended March 29, 1997, excludes the effect of assuming the
conversion of $68,500,000 principal amount of 4% subordinated convertible
debentures, convertible at $6.33 per share, because the effect would be
antidilutive.
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THERMO ECOTEK CORPORATION
6. Subsequent Event
In May 1998, Thermo Electron converted the Company's $68,500,000
principal amount of 4% subordinated convertible debentures into
10,821,485 shares of the Company's common stock.
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 heading "Risk Factors" included in the
Company's Registration Statement on Form S-2 (File No. 333-52365), filed
with the Securities and Exchange Commission.
Overview
The Company reports its results in two business segments. The Energy
segment currently operates independent electric power-generation
facilities through joint ventures, limited partnerships, or wholly owned
subsidiaries (the Operating Companies) and also operates a sub-bituminous
coal-beneficiation facility (the K-Fuel Facility). The Biopesticide
segment manufactures and sells biopesticides through the Company's
majority-owned subsidiary, Thermo Trilogy Corporation.
In the Energy segment, each Operating Company in the United States
sells power under a long-term power-sales agreement. The profitability of
operating the Company's facilities depends on the price received for
power under the power-sales agreements with power purchasers, on plant
performance or availability, and on the fuel, operating, and maintenance
costs for the facilities. As of January 1998, the Energy segment operates
a 12-megawatt energy center and five auxiliary boilers in the Czech
Republic. The Energy segment earns a disproportionately high share of its
income in May to October due to the rate structures under the power-sales
agreements for its California plants, which provide strong incentives to
operate during this period of high demand. Conversely, the Energy segment
has historically operated at marginal profitability during the second
fiscal quarter due to the rate structure under these agreements. The
Energy segment's profitability is also dependent on the amount of
development expenses that it incurs.
The Company has also entered the field of engineered clean fuels
through a limited partnership agreement with KFx, Inc. The Company is a
95% partner in a partnership established to develop, construct, and
operate a sub-bituminous coal-beneficiation facility using the patented
K-Fuel technology. This facility, located near Gillette, Wyoming, will
11
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THERMO ECOTEK CORPORATION
Overview (continued)
use the K-Fuel technology, which transforms low-energy, high-moisture
coal into low-moisture, high-energy fuel with reduced sulfur. The Company
believes that the K-Fuel Facility was placed in service during April
1998. The economic returns of the K-Fuel Facility primarily result from
tax credits on the facility's production of K-Fuel. The Company expects
that the K-Fuel Facility will report operating losses for financial
reporting purposes, primarily as a result of recording depreciation over
the expected life of the tax credit.
The Company has expanded its energy operations into international
markets and has begun business development efforts in Italy and the Czech
Republic. In January 1998, the Company, through a wholly owned
subsidiary's participation in a joint venture (EMD Ventures), indirectly
acquired an 83% interest in the assets of a 12-megawatt energy center
near Tabor, Czech Republic, along with the business of five auxiliary
boilers in the town of Pribram, Czech Republic (the Czech Republic
operations). The Company has begun construction to expand the 12-megawatt
facility to 50-megawatt capacity. The cost of business development
efforts is expected to increase as the Company expands into these markets
due to increased complexity inherent in foreign development. In addition,
the amount of cash required to fund equity investments is expected to
increase, due to the financing requirements of lenders in foreign
markets.
Thermo Trilogy's biopesticide products include botanical extracts
from the seed of the tropical neem tree, microbial-based pesticides
(fungal-based insecticides and fungicides, bacterial-based insecticides,
baculovirus, and beneficial nematodes), insect pheromone-based products
such as traps and lures, and disease-free sugar cane planting stock.
These biopesticide products are used as alternatives or complements to
conventional chemical-based pest-control technologies. In January 1997,
Thermo Trilogy acquired substantially all of the assets of biosys, inc.
In November 1997, Thermo Trilogy acquired the sprayable bacillus
thuringiensis (Bt) - biopesticide business of Novartis AG and its
affiliates (the Bt business of Novartis; Note 3).
Since its inception, the Company has derived a substantial majority
of its revenues from the development, construction, and operation of
biomass electric generation facilities. While the Company's U.S. biomass
energy business is expected to continue to generate revenues for the
foreseeable future, the Company expects the aggregate revenues and
profitability associated with this business to decline significantly
beginning in fiscal 2000. In addition, within the next few years the
Company expects a substantial portion of its revenues to be derived from
new business ventures in clean power resources, clean fuels, and
biopesticides. A major portion of the Company's efforts will be focused
on developing and acquiring new power projects, additional clean fuel
projects, and its biopesticides business. The Company has had limited
prior experience in the repowering of power plants and the development
and sale of clean fuels, and there can be no assurance that the Company
will be able to successfully develop, market or sell its products and
services in these areas. The Company's future success will depend
12
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THERMO ECOTEK CORPORATION
Overview (continued)
significantly on its ability to develop, introduce, and integrate new
products and services in these areas. No assurance can be given that the
Company will be successful in this regard. Any failure or inability of
the Company to implement these strategies would have a material adverse
effect on the Company's business, financial condition, and results of
operations.
Results of Operations
Second Quarter Fiscal 1998 Compared With Second Quarter Fiscal 1997
-------------------------------------------------------------------
Total revenues in the second quarter of fiscal 1998 increased 22% to
$47.2 million from $38.7 million in the second quarter of fiscal 1997.
Revenues from the Energy segment in the second quarter of fiscal 1998
were $39.2 million, compared with $35.0 million in the second quarter of
fiscal 1997. The increase was primarily due to the inclusion of $2.4
million of revenues from the Czech Republic operations, acquired in
January 1998, and, to a lesser extent, higher contractual energy rates at
the Company's Delano, Gorbell, and Whitefield facilities. Pursuant to the
Company's utility contracts for its four plants in California, there will
be no further contractual energy rate increases beginning in calendar
1998.
Revenues at Thermo Trilogy in the second quarter of fiscal 1998 were
$8.0 million, compared with $3.7 million in the second quarter of fiscal
1997. The increase was substantially due to the inclusion of revenues
from the Bt business of Novartis, acquired in November 1997 (Note 3),
and, to a lesser extent, the biosys business, acquired in January 1997.
The gross profit margin increased to 29% in the second quarter of
fiscal 1998 from 25% in the second quarter of fiscal 1997. The gross
profit margin for the Energy segment increased to 26% in the second
quarter of fiscal 1998 from 23% in the second quarter of fiscal 1997. The
improvement resulted primarily from higher contractual energy rates at
the Company's Delano, Gorbell, and Whitefield facilities as well as the
inclusion of higher-margin revenues from the Czech Republic operations.
The gross profit margin for Thermo Trilogy decreased to 37% in the
second quarter of fiscal 1998 from 47% in the second quarter of fiscal
1997, primarily due to the inclusion in fiscal 1998 of lower-margin
revenues from the Bt business of Novartis.
The power-sales agreements for the Company's Woodland, Mendota, and
Delano plants in California are so-called standard offer #4 (SO#4)
contracts, which require Pacific Gas & Electric (PG&E), in the case of
Woodland and Mendota, and Southern California Edison (SCE), in the case
of Delano I and Delano II, to purchase the power output of the projects
at fixed rates until 2000 in the case of Woodland and Mendota, and 2001
in the case of Delano. However, with respect to Woodland and Mendota,
PG&E has asserted that the fixed rates under its agreements will
terminate mid-1999, although the Company disputes this assertion.
Thereafter, the utility will pay a rate based upon the costs that would
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THERMO ECOTEK CORPORATION
Second Quarter Fiscal 1998 Compared With Second Quarter Fiscal 1997
-------------------------------------------------------------------
have otherwise been incurred by the purchasing utilities in generating
their own electricity or in purchasing it from other sources (avoided
cost) (as determined from time to time by the California Public Utility
Commission). Avoided cost is determined pursuant to a formula that is
intended to estimate the price that the utility would, but for its
contract with the power producer, be paying for the same amount of
energy. The rate fluctuates with the price of fuels and certain other
factors. At present, the avoided cost is substantially lower than the
payments currently being made by PG&E and SCE to the Company under fixed
rate portions of its contracts. In addition, although it is difficult to
predict future levels of avoided-costs, based on current estimates,
avoided cost is expected to be substantially lower in 2000 than the rates
currently being paid by PG&E and SCE under its fixed-rate contracts. The
Company expects, that at current avoided cost rates, absent sufficient
reductions in fuel prices and other operating costs, the Company's
Mendota and Delano plants would operate at substantially reduced
operating income levels or at a loss beginning in fiscal 2001. In fiscal
1997 the Mendota and Delano plants' aggregate operating income was
approximately $34.0 million. Further, if the Woodland plant were to
operate at projected avoided cost levels, substantial losses would result
primarily due to nonrecourse lease obligations that extend beyond 2000.
Absent sufficient reductions in fuel prices and other operating costs,
under such circumstances the Company would draw down power reserve funds
to cover operating cash shortfalls and then, should such funds be
depleted, either renegotiate its nonrecourse lease for the Woodland plant
or forfeit its interest in the plant. During the first quarter of fiscal
1997, the Company began recording as an expense the funding of reserves
required under Woodland's nonrecourse lease agreement to cover projected
shortfalls in lease payments beginning in 2000. Consequently, the results
of the Woodland plant were greatly diminished during 1997 and the Company
expects that such results will be reduced to approximately breakeven in
1998 and thereafter. During fiscal 1997 and 1996, the Woodland plant
contributed $1.0 million and $5.1 million of operating income,
respectively.
The Company believes that the K-Fuel Facility was placed in service
in April 1998 and the Company began reporting the K-Fuel Facility's
results of operations at that time. Although the facility has operated
and produced commercially salable product, the Company has encountered
certain difficulties in optimizing its performance to achieve optimal and
sustained operation. The Company has addressed and resolved certain
problems previously encountered, including a fire at the facility and
certain construction problems, including issues relating to the flow of
materials within the facility and the design and operation of certain
pressure-release equipment. Currently, the Company is experiencing
certain operational problems relating to tar and fines residue build-up
within the system during production and other product quality issues
related to product dusting. The Company is actively exploring solutions
to these problems. Because the technology being developed at the facility
is new and untested, no assurance can be given that other difficulties
will not arise or that the Company will be able to correct these problems
and achieve optimal and sustained performance. In addition, no assurance
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THERMO ECOTEK CORPORATION
Second Quarter Fiscal 1998 Compared With Second Quarter Fiscal 1997
-------------------------------------------------------------------
(continued)
can be given that the K-Fuel Facility would be determined to be qualified
for the tax credit, or that the Company will realize a benefit from the
tax credit.
Selling, general, and administrative expenses as a percentage of
revenues remained unchanged at 14% in the second quarter of fiscal 1998
and 1997.
Research and development expenses represent Thermo Trilogy's ongoing
new product development and increased to $0.8 million in the second
quarter of fiscal 1998 from $0.4 million in the second quarter of fiscal
1997 due to the acquisition of the Bt business of Novartis.
Interest income was relatively unchanged at $0.8 million in the
second quarter of fiscal 1998, compared with $0.9 million in the second
quarter of fiscal 1997. Interest income earned on invested proceeds from
the Company's April 1997 issuance of $50.0 million principal amount of
4.875% subordinated convertible debentures was largely offset by a
reduction in invested funds due to cash expended for the acquisition of
the Czech Republic operations, the repurchase of Company common stock,
and construction of the K-Fuel Facility.
Interest expense was unchanged at $3.1 million in the second quarter
of fiscal 1998 and 1997. An increase in interest expense related to the
issuance of the 4.875% subordinated convertible debentures was offset by
a decrease in interest expense due to lower outstanding debt related to
the Company's Delano and Mendota plants.
The Company and its parent, Thermo Electron Corporation, have adopted
a strategy of spinning out certain of their businesses into separate
subsidiaries and having these subsidiaries sell a minority interest to
outside investors. The Company believes that this strategy provides
additional motivation and incentives for the management of the
subsidiaries through the establishment of subsidiary-level stock option
incentive programs, as well as capital to support the subsidiaries'
growth. As a result of the sale of stock by Thermo Trilogy, the Company
recorded a nontaxable gain on issuance of stock by subsidiary of $2.2
million in the second quarter of fiscal 1998 (Note 4). The size and
timing of these transactions are dependent on market and other conditions
that are beyond the Company's control. In addition, in October 1995, the
Financial Accounting Standards Board (FASB) issued an exposure draft of a
Proposed Statement of Financial Accounting Standards, "Consolidated
Financial Statements: Policy and Procedures" (the Proposed Statement).
The Proposed Statement would establish new rules for how consolidated
financial statements should be prepared. If the Proposed Statement is
adopted, there would be significant changes in the way the Company
records certain transactions of its controlled subsidiaries. Among those
changes, any sale of the stock of a subsidiary that does not result in a
loss of control would be accounted for as a transaction in the equity of
the consolidated entity with no gain or loss being recorded. The FASB
continues to deliberate on this issue and the timing and contents of any
15
PAGE
<PAGE>
THERMO ECOTEK CORPORATION
Second Quarter Fiscal 1998 Compared With Second Quarter Fiscal 1997
-------------------------------------------------------------------
(continued)
final statement are uncertain. Accordingly, there can be no assurance
that the Company will be able to realize gains from such transactions in
the future.
Equity in earnings of joint venture represents the Company's
proportionate share of income from a joint venture.
The Company's effective tax rate was 21% in the second quarter of
fiscal 1998, compared with 32% in the second quarter of fiscal 1997. The
effective tax rate in the second quarter of fiscal 1998 was below the
statutory federal income tax rate due to the nontaxable gain on issuance
of stock by subsidiary. The effective tax rate in both periods reflects
the exclusion of income taxed directly to a minority partner.
Minority interest expense represents the allocation of income from
plant operations to a minority partner in an Operating Company and, in
fiscal 1998, the minority shareholders' proportionate share of Thermo
Trilogy's results.
The Company is currently assessing the potential impact of the year
2000 on the processing of date-sensitive information by the Company's
computerized information systems and on products purchased by the
Company. The Company believes that its internal information systems are
either year 2000 compliant or will be so prior to the year 2000 without
incurring material costs. There can be no assurance, however, that the
Company will not experience unexpected costs and delays in achieving year
2000 compliance for its internal information systems, which could result
in a material adverse effect on the Company's future results of
operations.
The Company is presently assessing whether its key suppliers are
adequately addressing the year 2000 problem and the effect this might
have on the Company. The Company has not completed its analysis and is
unable to conclude at this time that the year 2000 problem as it relates
to products purchased from key suppliers is not reasonably likely to have
a material adverse effect on the Company's future results of operations.
First Six Months Fiscal 1998 Compared With First Six Months Fiscal 1997
-----------------------------------------------------------------------
Total revenues increased 23% to $95.0 million in the first six months
of fiscal 1998 from $77.2 million in the first six months of fiscal 1997.
Revenues from the Energy segment in the first six months of fiscal 1998
were $80.6 million, compared with $72.6 million in the first six months
of fiscal 1997. The increase was primarily due to higher contractual
rates at all the Company's facilities, except the Hemphill plant. The
increase was also due to the inclusion of $2.4 million of revenues from
the Czech Republic operations, purchased in January 1998, and, to a
lesser extent, higher electrical generation at all of the Company's
facilities due to the first six months of fiscal 1998 including 27 weeks,
compared with 26 weeks in the first six months of fiscal 1997.
16
PAGE
<PAGE>
THERMO ECOTEK CORPORATION
First Six Months Fiscal 1998 Compared With First Six Months Fiscal 1997
-----------------------------------------------------------------------
(continued)
Revenues at Thermo Trilogy in the first six months of fiscal 1998
were $14.4 million, compared with $4.6 million in the first six months of
fiscal 1997. The increase was substantially due to the inclusion of
revenues from the biosys business and the Bt business of Novartis,
acquired in January 1997 and November 1997, respectively.
The gross profit margin increased to 32% in the first six months of
fiscal 1998 from 29% in the first six months of fiscal 1997. The gross
profit margin for the Energy segment increased to 30% in the first six
months of fiscal 1998 from 27% in the first six months of fiscal 1997.
The improvement is primarily due to the reasons discussed in the results
of operations for the second quarter.
The gross profit margin for Thermo Trilogy decreased to 40% in the
first six months of fiscal 1998 from 50% in the first six months of
fiscal 1997. The decrease resulted primarily from the inclusion of
lower-margin revenues from the biosys business for six months in fiscal
1998, compared with three months in fiscal 1997, as well as the inclusion
of lower-margin revenues from the Bt business of Novartis.
Selling, general, and administrative expenses as a percentage of
revenues increased to 12% in the first six months of fiscal 1998 from 10%
in the first six months of fiscal 1997. The increase resulted primarily
from the inclusion of higher selling, general, and administrative
expenses as a percentage of revenues at Thermo Trilogy due to the
acquisitions of the Bt business of Novartis and the biosys business.
Research and development expenses represent Thermo Trilogy's ongoing
new product development and increased to $1.4 million in the first six
months of fiscal 1998 from $0.6 million in the first six months of fiscal
1997 primarily due to the reason discussed in the results of operations
for the second quarter.
Interest income increased to $2.4 million in the first six months of
fiscal 1998 from $2.3 million in the first six months of fiscal 1997.
Interest income earned on invested proceeds from the Company's issuance
of the 4.875% subordinated convertible debentures was largely offset by a
reduction in invested funds due to cash expended for the acquisition of
the Bt business of Novartis, the repurchase of Company common stock, and
construction of the K-Fuel Facility.
Interest expense increased to $6.8 million in the first six months of
fiscal 1998 from $6.6 million in the first six months of fiscal 1997. An
increase in interest expense related to the issuance of the 4.875%
subordinated convertible debentures was largely offset by a decrease in
interest expense due to lower outstanding debt related to the Company's
Delano and Mendota plants.
Equity in earnings of joint venture represents the Company's
proportionate share of income from a joint venture.
17
PAGE
<PAGE>
THERMO ECOTEK CORPORATION
First Six Months Fiscal 1998 Compared With First Six Months Fiscal 1997
-----------------------------------------------------------------------
(continued)
The Company's effective tax rates were 24% and 36% in the first six
months of fiscal 1998 and 1997, respectively. The effective tax rate in
the first six months of fiscal 1998 was below the statutory federal
income tax rate due to the nontaxable gain on issuance of stock by
subsidiary. The effective tax rate exceeded the statutory federal income
tax rate in the first six months of fiscal 1997 primarily due to the
impact of state income taxes, offset in part by the exclusion of income
taxed directly to a minority partner.
Minority interest expense represents the allocation of income from
plant operations to a minority partner in an Operating Company and, in
the first six months of fiscal 1998, the minority shareholders'
proportionate share of Thermo Trilogy's results.
Liquidity and Capital Resources
Working capital was $65.3 million at April 4, 1998, compared with
$90.7 million at September 27, 1997. The Company had cash, cash
equivalents, and current restricted funds of $60.9 million at April 4,
1998, compared with $104.3 million at September 27, 1997. Current
restricted funds held in trust pursuant to certain lease and debt
agreements totaled $14.4 million and $20.8 million at April 4, 1998, and
September 27, 1997, respectively. In addition, cash and cash equivalents
include $9.3 million and $12.0 million at April 4, 1998, and September
27, 1997, respectively, which are restricted by the terms of certain
lease and financing agreements. These restrictions limit the ability of
the Operating Companies to transfer funds to the Company in the form of
dividends, loans, advances, or other distributions. Further, until such
time, if ever, as projections of avoided costs change, all cash flows
from the Woodland Operating Company, other than cash required for tax
distributions, will be restricted from distribution to the Company.
During the first six months of fiscal 1998, the Company's operating
activities provided cash and restricted funds of $18.1 million. Cash from
the Company's operations was offset by cash used to fund increases in
accounts receivable and inventory of $3.5 million and $0.9 million,
respectively. The increase in accounts receivable was in support of
increased revenues due to the acquisition of the Bt business of Novartis
in November 1997 and the purchase of the Czech Republic operations in
January 1998. The increase in inventory was substantially associated with
the Company's Czech Republic operations.
During the first six months of fiscal 1998, the Company's investing
activities used cash of $41.1 million. In November 1997, the Company,
through Thermo Trilogy, acquired the Bt business of Novartis for $19.1
million in cash and the assumption of certain liabilities (Note 3). In
March 1998, the Company acquired two power-generation facilities and
related sites in California for approximately $9.5 million in cash and
the assumption of certain liabilities. The Company, through its Limited
Partnership Agreement with KFx Wyoming, Inc., expended $7.5 million for
the construction of the K-Fuel Facility. In January 1998, the Company,
through a wholly owned subsidiary's participation in a joint venture,
18
PAGE
<PAGE>
THERMO ECOTEK CORPORATION
Liquidity and Capital Resources (continued)
indirectly acquired an 83% interest in the assets of a 12-megawatt energy
center near Tabor, Czech Republic, along with the business of five
auxiliary boilers in the town of Pribram, Czech Republic, for $6.9
million in cash. In addition, the Company expended $1.9 million on other
capital expenditures during the first six months of fiscal 1998. During
the remainder of fiscal 1998, the Company expects to expend approximately
$2.0 million on capital additions.
During the first six months of fiscal 1998, the Company's financing
activities used cash of $20.4 million. The Company used cash of $24.7
million for the repayment of long-term obligations and payments under
capital lease obligations related to two of its California plants. In the
first six months of fiscal 1998, Thermo Trilogy issued shares of its
common stock in private placements for net proceeds of approximately
$14.9 million (Note 4). Through a series of transactions commencing in
April 1997, the Company's Board of Directors has authorized the
repurchase, through various dates, of up to $30 million of its own
securities in the open market, or in negotiated transactions. Through
April 4, 1998, the Company had repurchased $29.9 million in common stock
under these authorizations, including $10.2 million during the first six
months of fiscal 1998. Any such purchases are funded from working
capital.
In September 1996, the Company, through a wholly owned subsidiary,
formed a joint venture with Marcegaglia Group of Mantova, Italy, to
develop, own, and operate biomass-fueled electric power facilities in
that country, which may require significant equity investments if
development efforts are successful. In January 1996, the Company, through
a wholly owned subsidiary, entered into a joint development agreement
with EMD Praha Spol s.r.o. (EMD) in the Czech Republic. In January 1998,
the Company entered into a new joint venture arrangement with EMD,
superseding the prior agreement, which may require significant equity
investments if development efforts are successful.
The Company's short-term financing requirements at April 4, 1998,
consisted primarily of $16.9 million, due in the remainder of fiscal
1998, of principal and interest payments related to the long-term
financing provisions for the Mendota and Delano projects. The Company
expects that the cash flows of its Mendota, Delano I, and Delano II
plants will be sufficient to make future lease and debt payments. The
Company believes that its short-term liquidity needs will be met through
cash flows from operating activities. The Company has commenced an
expansion project in its Czech power operations, acquired in January
1998. The Company estimates the cost of this expansion as $25.0 million,
of which it expects approximately 66% will be funded by bank financing
and the remainder from internal funds. While the Company does not
currently have any firm available credit facilities, it does not expect
to require funding for currently existing operations in the foreseeable
future, with the exception of the financing required for the expansion
project at its Czech Republic operations. The Company is in the early
stages of developing projects in Italy, the Czech Republic, and Southern
California. Equity investments required by the Company for these
19
PAGE
<PAGE>
THERMO ECOTEK CORPORATION
Liquidity and Capital Resources (continued)
development efforts, if successful, are uncertain, but may be
significant. Although the Company's projects are designed to produce cash
flow over the long-term, the Company will have to obtain significant
additional funds from time to time to complete acquisitions and to meet
project development requirements, including the funding of equity
investments. As the Company acquires, invests in, or develops future
plants, the Company expects to finance them with nonrecourse debt,
internal funds, additional equity or through borrowings from third
parties or Thermo Electron. Although Thermo Electron has expressed its
willingness to provide funds to the Company to help finance acquisitions
and equity investments in future projects, the Company has no agreements
with Thermo Electron or third parties that assure funds will be available
on acceptable terms or at all.
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders
------------------------------------------------------------
On March 10, 1998, at the Annual Meeting of Shareholders, the
shareholders elected seven directors to a one-year term expiring in 1999.
The Directors elected at the meeting were: Mr. Jerry P. Davis, Dr. George
N. Hatsopoulos, Mr. John N. Hatsopoulos, Mr. Brian D. Holt, Mr. Frank
Jungers, Mr. William A. Rainville, and Dr. Susan F. Tierney. Dr. George
Hatsopoulos, Mr. John Hatsopoulos, Mr. Rainville, and Dr. Tierney each
received 23,666,795 shares voted in favor of his or her election and
4,551 shares voted against. Mr. Davis received 23,664,227 shares voted in
favor of his election and 7,119 shares voted against. Mr. Holt received
23,659,295 shares voted in favor of his election and 12,051 shares voted
against. Mr. Jungers received 23,666,765 shares voted in favor of his
election and 4,581 shares voted against. No abstentions or broker
non-votes were recorded on the election of directors.
Item 6 - Exhibits
-----------------
See Exhibit Index on the page immediately preceding exhibits.
20
PAGE
<PAGE>
THERMO ECOTEK 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 12th day of May 1998.
THERMO ECOTEK CORPORATION
/s/ Paul F. Kelleher
---------------------------
Paul F. Kelleher
Chief Accounting Officer
/s/ John N. Hatsopoulos
---------------------------
John N. Hatsopoulos
Chief Financial Officer and
Senior Vice President
21
PAGE
<PAGE>
THERMO ECOTEK CORPORATION
EXHIBIT INDEX
Exhibit
Number Description
------------------------------------------------------------------------
27.1 Financial Data Schedule for the quarter ended March 30,
1996 (restated for the adoption of SFAS No. 128 and a
three-for-two stock split, distributed in October 1996).
27.2 Financial Data Schedule for the quarter ended June 29,
1996 (restated for the adoption of SFAS No. 128 and a
three-for-two stock split, distributed in October 1996).
27.3 Financial Data Schedule for the year ended September 28,
1996 (restated for the adoption of SFAS No. 128).
27.4 Financial Data Schedule for the quarter ended December
28, 1996 (restated for the adoption of SFAS No. 128).
27.5 Financial Data Schedule for the quarter ended March 29,
1997 (restated for the adoption of SFAS No. 128).
27.6 Financial Data Schedule for the quarter ended June 28,
1997 (restated for the adoption of SFAS No. 128).
27.7 Financial Data Schedule for the year ended September 27,
1997 (restated for the adoption of SFAS No. 128).
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
ECOTEK CORPORATION'S QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED MARCH
30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> MAR-30-1996
<CASH> 81,374
<SECURITIES> 0
<RECEIVABLES> 20,555
<ALLOWANCES> 0
<INVENTORY> 9,164
<CURRENT-ASSETS> 124,895
<PP&E> 283,452
<DEPRECIATION> 37,444
<TOTAL-ASSETS> 400,783
<CURRENT-LIABILITIES> 47,083
<BONDS> 149,018
0
0
<COMMON> 2,337
<OTHER-SE> 94,484
<TOTAL-LIABILITY-AND-EQUITY> 400,783
<SALES> 67,801
<TOTAL-REVENUES> 67,801
<CGS> 50,749
<TOTAL-COSTS> 50,749
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,464
<INCOME-PRETAX> 6,781
<INCOME-TAX> 2,545
<INCOME-CONTINUING> 3,661
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,661
<EPS-PRIMARY> .24
<EPS-DILUTED> .19
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
ECOTEK CORP.'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE 29, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-28-1996
<PERIOD-END> JUN-29-1996
<CASH> 68,519
<SECURITIES> 0
<RECEIVABLES> 23,836
<ALLOWANCES> 0
<INVENTORY> 11,902
<CURRENT-ASSETS> 125,186
<PP&E> 298,025
<DEPRECIATION> 41,872
<TOTAL-ASSETS> 414,977
<CURRENT-LIABILITIES> 51,079
<BONDS> 147,018
0
0
<COMMON> 2,395
<OTHER-SE> 104,395
<TOTAL-LIABILITY-AND-EQUITY> 414,977
<SALES> 103,117
<TOTAL-REVENUES> 103,117
<CGS> 75,213
<TOTAL-COSTS> 75,213
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,152
<INCOME-PRETAX> 12,246
<INCOME-TAX> 4,646
<INCOME-CONTINUING> 6,685
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,685
<EPS-PRIMARY> .29
<EPS-DILUTED> .22
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION ETRACTED FROM THERMO ECOTEK
CORPORATION'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED SEPTEMBER 28, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-28-1996
<PERIOD-END> SEP-28-1996
<CASH> 63,238
<SECURITIES> 0
<RECEIVABLES> 28,061
<ALLOWANCES> 0
<INVENTORY> 11,299
<CURRENT-ASSETS> 126,487
<PP&E> 309,384
<DEPRECIATION> 46,618
<TOTAL-ASSETS> 449,145
<CURRENT-LIABILITIES> 50,270
<BONDS> 140,781
0
0
<COMMON> 2,426
<OTHER-SE> 127,261
<TOTAL-LIABILITY-AND-EQUITY> 449,145
<SALES> 150,076
<TOTAL-REVENUES> 150,076
<CGS> 101,883
<TOTAL-COSTS> 101,883
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,727
<INCOME-PRETAX> 26,326
<INCOME-TAX> 7,271
<INCOME-CONTINUING> 17,780
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,780
<EPS-PRIMARY> .76
<EPS-DILUTED> .54
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
ECOTEK 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.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-27-1997
<PERIOD-END> DEC-28-1996
<CASH> 63,320
<SECURITIES> 0
<RECEIVABLES> 21,828
<ALLOWANCES> 0
<INVENTORY> 12,983
<CURRENT-ASSETS> 135,775
<PP&E> 315,856
<DEPRECIATION> 51,354
<TOTAL-ASSETS> 459,410
<CURRENT-LIABILITIES> 54,590
<BONDS> 131,259
0
0
<COMMON> 2,497
<OTHER-SE> 139,918
<TOTAL-LIABILITY-AND-EQUITY> 459,410
<SALES> 38,514
<TOTAL-REVENUES> 38,514
<CGS> 26,254
<TOTAL-COSTS> 26,254
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,537
<INCOME-PRETAX> 7,049
<INCOME-TAX> 2,749
<INCOME-CONTINUING> 4,300
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,300
<EPS-PRIMARY> .18
<EPS-DILUTED> .12
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
ECOTEK 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> 6-MOS
<FISCAL-YEAR-END> SEP-27-1997
<PERIOD-END> MAR-29-1997
<CASH> 47,427
<SECURITIES> 0
<RECEIVABLES> 23,081
<ALLOWANCES> 0
<INVENTORY> 17,033
<CURRENT-ASSETS> 105,518
<PP&E> 319,492
<DEPRECIATION> 55,990
<TOTAL-ASSETS> 435,987
<CURRENT-LIABILITIES> 55,591
<BONDS> 105,632
0
0
<COMMON> 2,517
<OTHER-SE> 140,355
<TOTAL-LIABILITY-AND-EQUITY> 435,987
<SALES> 77,188
<TOTAL-REVENUES> 77,188
<CGS> 55,135
<TOTAL-COSTS> 55,135
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,644
<INCOME-PRETAX> 9,202
<INCOME-TAX> 3,358
<INCOME-CONTINUING> 5,252
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,252
<EPS-PRIMARY> .21
<EPS-DILUTED> .16
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
ECOTEK CORPORATION'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE
28, 1997 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> SEP-27-1997
<PERIOD-END> JUN-28-1997
<CASH> 81,693
<SECURITIES> 0
<RECEIVABLES> 30,203
<ALLOWANCES> 0
<INVENTORY> 14,754
<CURRENT-ASSETS> 144,632
<PP&E> 323,441
<DEPRECIATION> 60,891
<TOTAL-ASSETS> 479,457
<CURRENT-LIABILITIES> 62,845
<BONDS> 149,420
0
0
<COMMON> 2,576
<OTHER-SE> 129,317
<TOTAL-LIABILITY-AND-EQUITY> 479,457
<SALES> 120,712
<TOTAL-REVENUES> 120,712
<CGS> 83,977
<TOTAL-COSTS> 83,977
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,292
<INCOME-PRETAX> 15,561
<INCOME-TAX> 5,756
<INCOME-CONTINUING> 8,850
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,850
<EPS-PRIMARY> .36
<EPS-DILUTED> .27
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
ECOTEK CORPORATION'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED SPETEMBER 27,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-27-1997
<PERIOD-END> SEP-27-1997
<CASH> 83,540
<SECURITIES> 0
<RECEIVABLES> 33,039
<ALLOWANCES> 0
<INVENTORY> 13,916
<CURRENT-ASSETS> 157,294
<PP&E> 328,837
<DEPRECIATION> 65,770
<TOTAL-ASSETS> 485,305
<CURRENT-LIABILITIES> 66,580
<BONDS> 136,190
0
0
<COMMON> 2,598
<OTHER-SE> 144,678
<TOTAL-LIABILITY-AND-EQUITY> 485,305
<SALES> 180,191
<TOTAL-REVENUES> 180,191
<CGS> 113,236
<TOTAL-COSTS> 113,236
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,296
<INCOME-PRETAX> 38,294
<INCOME-TAX> 14,415
<INCOME-CONTINUING> 22,545
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,545
<EPS-PRIMARY> .92
<EPS-DILUTED> .64
</TABLE>
