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 1-12636
THERMO REMEDIATION INC.
(Exact name of Registrant as specified in its charter)
Delaware 59-3203761
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1964 South Orange Blossom Trail
Apopka, Florida 32703
(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 13,107,409
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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
THERMO REMEDIATION INC.
Consolidated Balance Sheet
(Unaudited)
Assets
September 28, March 30,
(In thousands) 1996 1996
-------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents $ 19,574 $ 26,247
Short-term available-for-sale investments,
at quoted market value (amortized cost
of $9,102 and $7,007) 9,111 7,004
Accounts receivable, less allowances
of $814 and $786 20,667 15,115
Unbilled contract costs and fees 4,423 2,094
Prepaid income taxes 1,152 2,836
Prepaid expenses 1,997 2,196
Due from parent company and Thermo Electron 1,220 564
-------- --------
58,144 56,056
-------- --------
Property, Plant and Equipment, at Cost 55,790 52,119
Less: Accumulated depreciation and amortization 16,378 14,516
-------- --------
39,412 37,603
-------- --------
Long-term Available-for-sale Investments,
at Quoted Market Value (amortized cost
of $2,108 in fiscal 1996) - 2,098
-------- --------
Other Assets 15,867 11,724
-------- --------
Cost in Excess of Net Assets of Acquired
Companies (Note 2) 30,861 28,321
-------- --------
$144,284 $135,802
======== ========
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THERMO REMEDIATION INC.
Consolidated Balance Sheet (continued)
(Unaudited)
Liabilities and Shareholders' Investment
September 28, March 30,
(In thousands except share amounts) 1996 1996
-------------------------------------------------------------------------
Current Liabilities:
Notes payable $ 501 $ -
Accounts payable 5,464 3,362
Accrued payroll and employee benefits 2,781 2,539
Deferred revenue 1,715 936
Billings in excess of revenues earned 343 630
Accrued interest 790 776
Accrued income taxes 852 57
Other accrued expenses 2,831 1,413
-------- --------
15,277 9,713
-------- --------
Deferred Income Taxes 2,227 2,137
-------- --------
Long-term Obligations:
4 7/8% Subordinated convertible debentures 37,950 37,950
3 7/8% Subordinated convertible note, due
to parent company 2,650 2,650
Other 53 -
-------- --------
40,653 40,600
-------- --------
Shareholders' Investment (Note 2):
Common stock, $.01 par value, 50,000,000
shares authorized; 13,270,203 and 12,800,189
shares issued 133 128
Capital in excess of par value 85,170 81,353
Retained earnings 2,612 1,910
Treasury stock at cost, 164,344 and 2,154 shares (1,794) (31)
Net unrealized gain (loss) on available-for-sale
investments 6 (8)
-------- --------
86,127 83,352
-------- --------
$144,284 $135,802
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
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THERMO REMEDIATION INC.
Consolidated Statement of Income
(Unaudited)
Three Months Ended
----------------------------
September 28, September 30,
(In thousands except per share amounts) 1996 1995
--------------------------------------------------------------------------
Revenues $27,913 $14,466
------- -------
Costs and Operating Expenses:
Cost of revenues 23,485 10,222
Selling, general and administrative expenses 2,823 2,037
New business development expenses 261 281
------- -------
26,569 12,540
------- -------
Operating Income 1,344 1,926
Interest Income 496 733
Interest Expense (includes $25 and $27 to
related party) (544) (543)
Equity in Earnings of Unconsolidated Subsidiary 280 -
Loss on Sale of Investments (4) -
------- -------
Income Before Provision for Income Taxes 1,572 2,116
Provision for Income Taxes 598 786
------- -------
Net Income $ 974 $ 1,330
======= =======
Earnings per Share:
Primary $ .08 $ .11
======= =======
Fully diluted $ .07 $ .11
======= =======
Weighted Average Shares:
Primary 12,894 12,314
======= =======
Fully diluted 13,498 12,787
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
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THERMO REMEDIATION INC.
Consolidated Statement of Income
(Unaudited)
Six Months Ended
----------------------------
September 28, September 30,
(In thousands except per share amounts) 1996 1995
--------------------------------------------------------------------------
Revenues $51,433 $27,647
------- -------
Costs and Operating Expenses:
Cost of revenues 42,523 19,379
Selling, general and administrative expenses 5,725 4,203
New business development expenses 557 557
------- -------
48,805 24,139
------- -------
Operating Income 2,628 3,508
Interest Income 987 1,328
Interest Expense (includes $51 and $98 to
related party) (1,094) (914)
Equity in Earnings of Unconsolidated Subsidiary 559 -
Gain on Sale of Investments 136 80
------- -------
Income Before Provision for Income Taxes 3,216 4,002
Provision for Income Taxes 1,214 1,492
------- -------
Net Income $ 2,002 $ 2,510
======= =======
Earnings per Share:
Primary $ .16 $ .21
======= =======
Fully diluted $ .15 $ .20
======= =======
Weighted Average Shares:
Primary 12,863 12,230
======= =======
Fully diluted 13,511 12,707
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
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THERMO REMEDIATION INC.
Consolidated Statement of Cash Flows
(Unaudited)
Six Months Ended
----------------------------
September 28, September 30,
(In thousands) 1996 1995
----------------------------------------------------------------------------
Operating Activities:
Net income $ 2,002 $ 2,510
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 3,371 2,705
Equity in earnings of unconsolidated
subsidiary (559) -
Gain on sale of investments (136) (80)
Provision for losses on accounts
receivable 95 (3)
Other noncash expenses 35 26
Decrease in deferred income taxes - (2)
Changes in current accounts, excluding the
effects of acquisition:
Accounts receivable (4,523) (1,673)
Due from parent company and Thermo
Electron (656) (5,005)
Other current assets (2,394) (37)
Billings in excess of revenues earned (287) 483
Accrued interest 10 762
Other current liabilities 4,220 418
-------- --------
Net cash provided by operating
activities 1,178 104
-------- --------
Investing Activities:
Acquisition, net of cash acquired (Note 2) (1,681) -
Purchases of available-for-sale investments (15,759) (23,248)
Proceeds from sale and maturities of
available-for-sale investments 15,908 11,580
Purchases of property, plant and equipment (3,953) (4,629)
Proceeds from sale of property, plant and
equipment 59 573
Purchase of other assets (1,178) -
Other - (4)
-------- --------
Net cash used in investing
activities (6,604) (15,728)
-------- --------
Financing Activities:
Net proceeds from issuance of subordinated
convertible debentures - 36,889
Repayment of note payable to Thermo Electron - (4,000)
Net proceeds from issuance of Company
common stock 172 6,675
Repurchase of Company common stock (1,763) -
Dividends paid (450) (551)
Other 794 -
-------- --------
Net cash provided by (used in)
financing activities $ (1,247) $ 39,013
-------- --------
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THERMO REMEDIATION INC.
Consolidated Statement of Cash Flows (continued)
(Unaudited)
Six Months Ended
----------------------------
September 28, September 30,
(In thousands) 1996 1995
----------------------------------------------------------------------------
Increase (Decrease) in Cash and Cash Equivalents $ (6,673) $ 23,389
Cash and Cash Equivalents at Beginning of Period 26,247 792
-------- --------
Cash and Cash Equivalents at End of Period $ 19,574 $ 24,181
======== ========
Noncash Activities (Note 2):
Fair value of assets of acquired company $ 6,476 $ -
Cash paid for acquired company (1,705) -
Issuance of common stock for acquired company (2,006) -
-------- --------
Liabilities assumed of acquired company $ 2,765 $ -
======== ========
Dividends reinvested by shareholders into
Company common stock $ 850 $ 679
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
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THERMO REMEDIATION INC.
Notes to Consolidated Financial Statements
1. General
The interim consolidated financial statements presented have been
prepared by Thermo Remediation 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
six-month periods ended September 28, 1996 and September 30, 1995, and
the cash flows for the six-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 March 30, 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 March 30, 1996, filed with
the Securities and Exchange Commission.
Certain amounts in fiscal 1996 have been reclassified to conform to
the fiscal 1997 financial statement presentation.
2. Acquisition
In September 1996, the Company acquired IEM Sealand Corporation (IEM
Sealand) for 311,040 shares of the Company's common stock, valued at $2.0
million, and $1.7 million in cash. The shares of the Company's common
stock issued in connection with the acquisition are subject to certain
restrictions on transfer. The restrictions lapse with respect to one
third of the shares on each of the third, fourth, and fifth anniversaries
of the closing. IEM Sealand provides construction services for the
remediation of hazardous wastes under contracts with federal and state
governments, and other public and private sector clients.
This acquisition has been accounted for using the purchase method of
accounting and IEM Sealand's results of operations have been included in
the accompanying financial statements from the date of acquisition. IEM
Sealand had a negative book value at the date of acquisition. The cost of
this acquisition exceeded the estimated fair value of the acquired net
assets by $5.4 million, which is being amortized over 40 years.
Allocation of the purchase price for this acquisition was based on an
estimate of the fair value of the net assets acquired and is subject to
adjustment. Pro forma data is not presented since this acquisition was
not material to the Company's results of operations or financial
position.
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THERMO REMEDIATION INC.
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 is a leading national provider of environmental services
including industrial remediation, nuclear remediation, hazardous waste
remedial construction cleanup, soil remediation, and waste fluids
recycling.
In December 1995, the Company acquired Remediation Technologies,
Inc. (ReTec), a provider of consulting, engineering, and on-site services
to help clients manage problems associated with environmental compliance,
waste management, and the remediation of industrial sites contaminated
with organic wastes and residues.
In September 1996, the Company acquired IEM Sealand Corporation (IEM
Sealand), a provider of construction services for the remediation of
hazardous wastes under contracts with federal and state governments, and
other public and private sector clients. IEM Sealand's business is
traditionally strongest during the summer and fall seasons.
The Company's Thermo Nutech division provides services to remove
radioactive contaminants from sand, gravel, and soil, as well as health
physics, radiochemistry laboratory, and radiation dosimetry services.
The Company, through its TPS Technologies Inc. division, is also a
national leader in the design and operation of nonhazardous soil-
remediation facilities and operates a network of such facilities serving
customers in more than a dozen states along the East and West Coasts.
The Company's Thermo Fluids subsidiary collects, tests, processes,
and recycles used motor oil and other industrial oils.
The Company's businesses are affected by several factors,
particularly extreme weather variations, government spending, economic
cycles, and regulation and enforcement of remediation activities. In
addition, certain of the Company's businesses are affected by enactment
and enforcement of environmental legislation regarding underground
storage tanks, the availability of federal and state funding for
environmental cleanup, and local competition.
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THERMO REMEDIATION INC.
Results of Operations
Second Quarter Fiscal 1997 Compared With Second Quarter Fiscal 1996
Revenues in the second quarter of fiscal 1997 were $27,913,000,
compared with $14,466,000 in the second quarter of fiscal 1996, an
increase of 93%. Revenues increased primarily due to the inclusion of
$13,700,000 in revenues from ReTec and IEM Sealand, which were acquired
in December 1995 and September 1996, respectively (Note 2). Revenues from
nuclear services increased 15% due to higher revenues in fiscal 1997 from
health physics services. Revenues from soil-remediation services
decreased 21% resulting from declines in the volume of soil processed due
to reduced compliance requirements and/or relaxed enforcement activities
in several states and competitive pricing pressures. Revenues from
fluids-recycling services increased 39% due to the addition of a new
facility in Nevada.
The gross profit margin decreased to 16% in the second quarter of
fiscal 1997 from 29% in the second quarter of fiscal 1996, due to lower
volumes of soil processed at the Company's traditionally higher-margin
soil-remediation centers and, to a lesser extent, lower margins on the
soil processed due to competitive pricing pressures. The gross profit
margin also decreased due to the inclusion of lower-margin revenues from
ReTec. The gross profit margin on nuclear services decreased due to
higher revenues from lower-margin health physics services.
Selling, general and administrative expenses as a percentage of
revenues decreased to 10% in the second quarter of fiscal 1997 from 14%
in the second quarter of fiscal 1996, primarily due to lower expenses as
a percentage of revenues at acquired companies.
Interest income decreased to $496,000 in the second quarter of
fiscal 1997 from $733,000 in the second quarter of fiscal 1996 as a
result of lower average invested balances following the acquisition of
ReTec in December 1995. Interest expense remained constant at $544,000 in
the second quarter of fiscal 1997 and $543,000 in the second quarter of
fiscal 1996.
Equity in earnings of unconsolidated subsidiary in the second
quarter of fiscal 1997 represents ReTec's proportionate share of income
from a joint venture.
The effective tax rates were 38% and 37% in the second quarter of
fiscal 1997 and 1996, respectively, which are higher than the Company's
federal statutory income tax rate primarily due to the impact of state
income taxes.
First Six Months Fiscal 1997 Compared With First Six Months Fiscal 1996
Revenues in the first six months of fiscal 1997 were $51,433,000,
compared with $27,647,000 in the first six months of fiscal 1996, an
increase of 86%. Revenues increased primarily due to the inclusion of
$24,194,000 in revenues from ReTec and IEM Sealand, which were acquired
in December 1995 and September 1996, respectively (Note 2). Revenues from
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THERMO REMEDIATION INC.
First Six Months Fiscal 1997 Compared With First Six Months Fiscal 1996
(continued)
nuclear services increased 10% due to higher revenues in fiscal 1997 from
health physics services and, to a lesser extent, from a long-term
environmental restoration contract for the U.S. Department of Energy's
(DOE's) Hanford site (Hanford). These increases were largely offset by a
decrease in radiochemistry laboratory work, reflecting ongoing reductions
in spending at the DOE, as well as a shift in DOE spending from
investigative work performed at the Company's laboratories to cleanup
work. Revenues from soil-remediation services decreased 15% primarily due
to the reasons discussed in the results of operations for the second
quarter. Revenues from fluids-recycling services increased 25% due to the
addition of a new facility in Nevada.
The gross profit margin decreased to 17% in the first six months of
fiscal 1997 from 30% in the first six months of fiscal 1996, primarily
due to lower volumes of soil processed at the Company's traditionally
higher-margin soil-remediation centers and, to a lesser extent, lower
margins on the soil processed due to competitive pricing pressures. The
gross profit margin also decreased due to the inclusion of lower-margin
revenues from ReTec. The gross profit margin on nuclear services
decreased due to higher operating costs, declining revenues and margins
from the traditionally higher-margin radiochemistry laboratory work, and
increased revenues from the lower-margin Hanford contract.
Selling, general and administrative expenses as a percentage of
revenues decreased to 11% in the first six months of fiscal 1997 from 15%
in the first six months of fiscal 1996, primarily due to lower expenses
as a percentage of revenues at acquired companies.
Interest income decreased to $987,000 in the first six months of
fiscal 1997 from $1,328,000 in the first six months of fiscal 1996 as a
result of lower average invested balances following the acquisition of
ReTec in December 1995. Interest expense increased slightly to $1,094,000
in the first six months of fiscal 1997 from $914,000 in the first six
months of fiscal 1996, primarily due to the issuance of subordinated
convertible debentures in May 1995.
Equity in earnings of unconsolidated subsidiary in the first six
months of fiscal 1997 represents ReTec's proportionate share of income
from a joint venture.
The effective tax rates were 38% and 37% in the first six months of
fiscal 1997 and 1996, respectively, which are higher than the Company's
federal statutory income tax rate primarily due to the impact of state
income taxes.
Liquidity and Capital Resources
Working capital, including cash, cash equivalents, and short-term
available-for-sale investments, was $42,867,000 at September 28, 1996,
compared with $46,343,000 at March 30, 1996. Cash, cash equivalents, and
short- and long-term available-for-sale investments were $28,685,000 at
September 28, 1996, compared with $35,349,000 at March 30, 1996. During
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THERMO REMEDIATION INC.
Liquidity and Capital Resources (continued)
the first six months of fiscal 1997, $1.2 million of cash was provided by
operating activities. In the first six months of fiscal 1997, the Company
funded an increase in accounts receivable, primarily due to higher
revenues at its IEM Sealand, Thermo Nutech, and Thermo Fluids divisions.
The use of cash was largely offset by an increase in other current
liabilities, primarily due to a $0.7 million and $0.8 million increase in
accrued income taxes and deferred revenues, respectively.
On September 5, 1996, the Company paid a semiannual cash dividend of
$0.10 per share of common stock, to shareholders of record as of August
22, 1996. The Company paid approximately $450,000 in connection with such
dividend. The amount of cash paid by the Company is dependent on the
number of shareholders participating in the Company's Dividend
Reinvestment Plan.
The Company's Board of Directors has authorized the repurchase,
through September 10, 1997, of up to $10.0 million of its own securities.
Any such purchases would be funded from working capital. Through
September 28, 1996, the Company expended $1.8 million under this
authorization.
During the six months ended September 28, 1996, the Company expended
$3,953,000 for purchases of property, plant and equipment. During the
remainder of fiscal 1997, the Company expects to make capital
expenditures of approximately $2,000,000, primarily to expand the
fluids-recycling services business.
In September 1996, the Company acquired IEM Sealand Corporation for
311,040 shares of the Company's common stock, valued at $2.0 million, and
$1.7 million in cash (Note 2).
Although the Company has no material commitments for capital
expenditures, such expenditures will largely be affected by the number of
complementary businesses that can be acquired or developed during the
year. The Company believes that it has adequate resources to meet its
financial needs for the foreseeable future.
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders
On September 25, 1996, at the Annual Meeting of Shareholders, the
shareholders elected seven incumbent directors to one-year terms expiring
in 1997. The directors reelected at the meeting were: John P. Appleton,
Elias P. Gyftopoulos, Fred Holubow, Theo Melas-Kyriazi, Frank E. Morris,
Jeffrey L. Powell, and William A. Rainville. Dr. Appleton,
Dr. Gyftopoulos, Mr. Melas-Kyriazi, Dr. Morris, and Mr. Rainville each
received 11,544,985 shares voted in favor of election and 140,097 shares
voted against. Mr. Holubow and Mr. Powell each received 11,544,685 shares
voted in favor of election and 140,397 shares voted against. No
abstentions or broker nonvotes were recorded on the election of
directors.
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THERMO REMEDIATION INC.
Item 4 - Submission of Matters to a Vote of Security Holders (continued)
The shareholders also approved a proposal to amend the Company's
Restated Certificate of Incorporation to increase the Company's
authorized common stock, $.01 par value per share, from 20 million shares
to 50 million shares as follows: 11,350,632 shares voted in favor,
234,645 shares voted against, 13,705 shares abstained, and 86,100 broker
nonvotes were recorded on the proposal.
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 fiscal 1997 and beyond to
differ materially from those expressed in any forward-looking statements
made by, or on behalf of, the Company.
Dependence on Environmental Regulation. Federal, state, and local
environmental laws govern each of the markets in which the Company
conducts business, as well as many of the Company's operations. The
markets for each of the Company's services, including industrial
remediation services, nuclear remediation services, hazardous waste
remedial construction services, soil-remediation services, and
waste-fluids recycling services, and the standards governing most aspects
of the construction and operation of the Company's facilities were
directly or indirectly created by, and are dependent on, the existence
and enforcement of those laws. There can be no assurance that these laws
and regulations will not change in the future, requiring new technologies
or stricter standards with which the Company must comply. In addition,
there can be no assurance that these laws and regulations will not be
made more lenient in the future, thereby reducing the size of the markets
addressed by the Company. Any such change in such federal, state, and
local environmental laws and regulations may have a material adverse
effect on the Company's business.
Responsibility for establishing and enforcing certain federal
policies, such as the federal underground storage tank policy, has been
delegated to the states, which are not only required to establish
regulatory programs, but also are permitted to mandate more stringent
requirements than are otherwise required by federal law. Currently, many
states are considering adopting a "risk-based" approach to prioritizing
site cleanups and setting cleanup standards, which attempt to balance the
costs of remediation against the potential harm to human health and the
environment from leaving sites unremediated. Although the Company
believes that it will be able to take advantage of this shift toward a
risk-based approach, there can be no assurance that these policies, if
implemented, will not reduce the size of the potential market addressed
by the Company.
Potential Environmental Regulatory Liability. The Company's
operations are subject to comprehensive laws and regulations related to
the protection of the environment. Among other things, these laws and
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THERMO REMEDIATION INC.
Item 5 - Other Information (continued)
regulations impose requirements to control air, soil, and water
pollution, and regulate health, safety, zoning, land use, and the
handling and transportation of hazardous and nonhazardous materials. Such
laws and regulations also impose liability for remediation and cleanup of
environmental contamination, both on-site and off-site, resulting from
past and present operations. These requirements may also be imposed as
conditions of operating permits or licenses that are subject to renewal,
modification, or revocation. Existing laws and regulations, and new laws
and regulations, may require the Company to modify, supplement, replace
or curtail its operating methods, facilities, or equipment at costs which
may be substantial, without any corresponding increase in revenue. The
Company is also potentially subject to monetary fines, penalties,
remediation, cleanup or stop orders, injunctions, or orders to cease, or
suspend certain of its practices. The outcome of any proceedings and
associated costs and expenses could have a material adverse impact on the
Company's business. In addition, the Company's Thermo Nutech and IEM
Sealand divisions are subject to numerous laws and regulations related to
the protection of human health and safety. Such laws and regulations may
impose liability on the Company for exposure of its employees to
radiation or other hazardous contamination or failure to isolate and
remove radioactive or other hazardous contaminants from soil.
The Company endeavors to operate its business to minimize its
exposure to environmental and other regulatory liabilities. In entering
into contracts with its customers, the Company seeks to maximize its
insulation from regulatory liabilities associated with the contaminated
soil, oil, and other wastes it handles. Although no claims giving rise to
such liabilities have been asserted by the Company's customers or
employees to date, there can be no assurance that such claims cannot or
will not be asserted against the Company.
Uncertainty of Funding. Remediation compliance requirements and
attendant costs are often beyond the financial capabilities of many
individuals and small companies. To address this problem, some states
have established tax-supported trust funds to assist in the financing of
compliance and site remediation. As a consequence, in many of the states
in which the Company markets its soil-remediation services, the majority,
and in some cases virtually all, of the soil remediated by the Company is
paid for by large companies and/or state trust funds. Any substantial
decrease in this funding could have a material adverse effect on the
Company's business and financial performance. Many states have realized
that the number of sites requiring remediation and the costs of
compliance are substantially higher than were originally estimated. As a
result, several states have relaxed enforcement activities and others
have reduced compliance requirements in order to reduce the costs of
cleanup. These factors have already resulted in lower levels of cleanup
activity in some states. Continued de-emphasis on enforcement activities
and/or further reductions in compliance requirements is having a material
adverse effect on the Company's business.
The Company depends on funding from the federal and state
governments, and their agencies and instrumentalities, for compensation
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THERMO REMEDIATION INC.
Item 5 - Other Information (continued)
for its services. For example, Thermo Nutech provides a large portion of
its services directly or indirectly to the U.S. Department of Energy
(DOE). Thermo Nutech has experienced a decrease in its radiochemistry
laboratory work as a result of ongoing reductions in spending at the DOE
as well as a shift in DOE spending from investigative work to cleanup
work. Continued declines in spending by DOE and other governmental
agencies could have a material adverse effect on the Company's business.
Competition. The markets for many of the Company's services are
regional and are characterized by intense competition from numerous local
competitors. Some of the Company's competitors have greater technical and
financial resources 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 services than the Company. Competition could increase
if new companies enter the market or if existing competitors expand their
service lines. There can be no assurance that the Company's current
technology, technology under development, or ability to develop new
technologies will be sufficient to enable it to compete effectively with
its competitors.
Seasonal Influences. A majority of the Company's businesses
experience seasonal fluctuations. A majority of the Company's
soil-remediation sites, as well as the Company's fluids-recycling sites,
experience declines in severe weather conditions. Site remediation work
and certain environmental testing services, such as the services provided
by ReTec, IEM Sealand, and Thermo Nutech, may decline in winter months as
a result of severe weather conditions. The Company's operations were
adversely affected by severe weather in the last quarter of fiscal 1996.
Possible Obsolescence Due to Technological Change. Technological
developments are expected to continue at a rapid pace in the
environmental services industry. The Company's technologies could be
rendered obsolete or uneconomical by technological advances by one or
more companies that address the Company's markets or by future entrants
into the industry. There can be no assurance that the Company would have
the resources to, or otherwise would be successful in, developing
responses to technological advances by others.
Risks Associated with Acquisition Strategy. The Company's strategy
includes the acquisition of businesses that complement or augment the
Company's existing services. Promising acquisitions are difficult to
identify and complete for a number of reasons, including competition
among prospective buyers and the need for regulatory approvals, including
antitrust approvals. Any acquisitions completed by the Company may be
made at substantial premiums over the fair value of the net assets of the
acquired companies. 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 businesses. 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
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THERMO REMEDIATION INC.
Item 5 - Other Information (continued)
Company and, in the case of equity financing, may result in dilution to
the Company's stockholders.
No Assurance of Development and Commercialization of Technology
Under Development. The Company is currently engaged in the development of
several technologies which may ultimately be commercialized to provide
services to customers. For example, the Company's Thermo Fluids division
is currently engaged in developing technology to enhance the quality of
the fuel oils produced in its fluids recycling business. There are a
number of technological challenges that the Company must successfully
address to complete any of its development efforts. Technology
development involves a high degree of risk, and returns to investors are
dependent upon successful development and commercialization of such
technology. There can be no assurance that any of the technologies
currently being developed by the Company, or those to be developed in the
future, will be technologically feasible or accepted by the marketplace,
or that any such development will be completed in any particular
timeframe.
Item 6 - Exhibits
See Exhibit Index on the page immediately preceding exhibits.
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THERMO REMEDIATION 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 1st day of November
1996.
THERMO REMEDIATION INC.
Paul F. Kelleher
--------------------
Paul F. Kelleher
Chief Accounting Officer
John N. Hatsopoulos
--------------------
John N. Hatsopoulos
Vice President and
Chief Financial Officer
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THERMO REMEDIATION INC.
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
-----------------------------------------------------------------------
3 Certificate of Incorporation, as filed on
September 23, 1993, as amended by Agreement of
Merger, as filed with the Secretary of State of
Delaware on November 1, 1993, and as further amended
by Certificate of Amendment to Certificate of
Incorporation of the Company, as filed with the
Secretary of State of Delaware on October 31, 1996.
10 Stock Holdings Assistance Plan and Form of
Promissory Note.
11 Statement re: Computation of earnings per share.
27 Financial Data Schedule.
EXHIBIT 3
CERTIFICATE OF INCORPORATION
OF
THERMO REMEDIATION INC.
* * * * * * *
FIRST: The name of the corporation is:
Thermo Remediation Inc.
SECOND: The address of its registered office in the
State of Delaware is 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of its
registered agent at such address is The Corporation Trust
Company.
THIRD: The purpose of the corporation is to engage in
any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of
Delaware.
FOURTH: The total number of shares of capital stock
which the corporation shall have authority to issue is
twenty million (20,000,000), and the par value of each of
such shares is one cent ($0.01), amounting in the aggregate
to two hundred thousand dollars ($200,000.00) of capital
stock.
FIFTH: The name and mailing address of the sole
incorporator is as follows:
NAME MAILING ADDRESS
Barbara J. Lucas 81 Wyman Street
Waltham, Massachusetts 02254
SIXTH: The names and mailing addresses of the persons
who are to serve as directors until the first annual meeting
of the stockholders or until their successors are elected
and qualified are as follows:
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<PAGE>
NAME MAILING ADDRESS
---- ---------------
John P. Appleton 81 Wyman Street
Waltham, Massachusetts 02254
John N. Hatsopoulos 81 Wyman Street
Waltham, Massachusetts 02254
Fred Holubow 2 N. LaSalle Street
Suite 605
Chicago, Illinois 60603
Theo Melas-Kyriazi 81 Wyman Street
Waltham, Massachusetts 02254
William A. Rainville 81 Wyman Street
Waltham, Massachusetts 02254
SEVENTH: The corporation is to have perpetual
existence.
EIGHTH: The private property of the stockholders shall
not be subject to the payment of the corporation debts to
any extent whatever.
NINTH: The following provisions are inserted for the
management of the business and for the conduct of the
affairs of the corporation and for defining and regulating
the powers of the corporation and its directors and
stockholders and are in the furtherance and not in
limitation of the powers conferred upon the corporation by
statute:
(a) The by-laws of the corporation may fix and
alter, or provide the manner for fixing and altering,
the number of directors constituting the whole Board.
In case of any vacancy on the Board of Directors or any
increase in the number of directors constituting the
whole Board, the vacancies shall be filled by the
directors or by the stockholders at the time having
voting power, as may be prescribed in the by-laws.
Directors need not be stockholders of the corporation,
and the election of directors need not be by ballot.
(b) The Board of Directors shall have the power
and authority:
(1) to make, alter or repeal by-laws of the
corporation, subject only to such limitation, if
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any, as may be from time to time imposed by law or
by the by-laws; and
(2) to the full extent permitted or not
prohibited by law, and without the consent of or
other action by the stockholders, to authorize or
create mortgages, pledges or other liens or
encumbrances upon any or all of the assets, real,
personal or mixed, and franchises of the
corporation, including after-acquired property,
and to exercise all of the powers of the
corporation in connection therewith; and
(3) subject to any provision of the by-laws,
to determine whether, to what extent, at what
times and places and under what conditions and
regulations the accounts, books and papers of the
corporation (other than the stock ledger), or any
of them, shall be open to the inspection of the
stockholders, and no stockholder shall have any
right to inspect any account, book or paper of the
corporation except as conferred by statute or
authorized by the by-laws or by the Board of
Directors.
TENTH: Meetings of stockholders may be held outside
the State of Delaware, if the by-laws so provide. The books
of the corporation may be kept outside of the State of
Delaware at such place or places as may be designated from
time to time by the Board of Directors or in the by-laws of
the corporation.
ELEVENTH: The corporation shall indemnify each
director and officer of the corporation, his heirs,
executors and administrators, and may indemnify each
employee and agent of the corporation, his heirs, executors,
administrators and all other persons whom the corporation is
authorized to indemnify under the provisions of the General
Corporation Law of the State of Delaware, to the maximum
extent permitted by law (a) against all expenses (including
attorney's fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in
connection with any action, suit or proceeding, whether
civil, criminal, administrative or investigative (except an
action by or in the right of the corporation), or in
connection with any appeal therein, or otherwise, and (b)
against all expenses (including attorney's fees) actually
and reasonably incurred by him in connection with the
defense or settlement of any action or suit by or in the
right of the corporation, or otherwise; and no provision of
this Article Eleventh is intended to be construed as
limiting, prohibiting, denying or abrogating any of the
general or specific powers or rights conferred by the
General Corporation Law of the State of Delaware upon the
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<PAGE>
corporation to furnish, or upon any court to award, such
indemnification, or indemnification as otherwise authorized
pursuant to the General Corporation Law of the State of
Delaware or any other law now or hereafter in effect.
The Board of Directors of the corporation may, in its
discretion, authorize the corporation to purchase and
maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise
against any liability asserted against him or incurred by
him in any such capacity, or arising out of his status as
such, whether or not the corporation would have the power to
indemnify him against such liability under the foregoing
paragraph of this Article Eleventh.
TWELFTH: To the maximum extent that Delaware law in
effect from time to time permits limitation of the liability
of directors, no director of the corporation shall be liable
to the corporation or its stockholders for money damages.
Neither the amendment nor repeal of this Article, nor the
adoption or amendment of any other provision of the
corporation's Certificate of Incorporation or by-laws
inconsistent with this Article, shall apply to or affect in
any respect the applicability of the preceding sentence with
respect to any act or failure to act which occurred prior to
such amendment, repeal or adoption. The limitation on
liability provided by this Article applies to events
occurring at the time a person serves as a director of the
corporation whether or not such person is a director at the
time of any proceeding in which liability is asserted.
THIRTEENTH: The corporation reserves the right to
amend, alter, change or repeal any provisions contained in
this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred
upon stockholders herein are granted subject to this
reservation.
THE UNDERSIGNED, being the sole incorporator
hereinbefore named, for the purpose of forming a corporation
pursuant to the General Corporation Law of the State of
Delaware, does make this certificate, hereby declaring and
certifying that this is my act and deed and the facts stated
herein are true, and accordingly have hereunto set my hand
this 23rd day of September, 1993.
Barbara J. Lucas
--------------------
Barbara J. Lucas
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CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
THERMO REMEDIATION INC.
Thermo Remediation Inc. (the "Corporation"), a corporation
organized and existing under the laws of the State of Delaware,
hereby certifies as follows, pursuant to Section 242 of the
General Corporation Law of the State of Delaware:
1. That Article FOURTH of the Certificate of Incorporation
of the Corporation, as filed on September 23, 1993, is hereby
amended to increase the number of authorized shares of the
Corporation's Common Stock, $.01 par value per share, from 20
million shares to 50 million shares and that such amendment is
hereby effected by deleting said Article in its entirety and
inserting the following in substitution therefor:
"FOURTH: The total number of shares of capital stock which
the Corporation shall have authority to issue is:
Fifty Million (50,000,000) shares, and the par
value of each such share in One Cent ($.01)."
2. That the Board of Directors of the Corporation by
unanimous written consent dated as of July 22, 1996, duly adopted
the following resolutions:
RESOLVED, that it is in the best interests of the
Corporation that the authorized common stock of
the Corporation, $.01 par value, be increased to
50 million shares, and that, upon the approval of
such increase by the Corporation's Stockholders,
the proper officers of the Corporation be, and
each of them hereby are, authorized, empowered and
directed to execute on behalf of the Corporation a
Certificate of Amendment to the Corporation's
Certificate of Incorporation to reflect such
increase, and to file, or cause to be filed, such
Certificate of Amendment with the Secretary of
State of the State of Delaware.
RESOLVED, that the Board of Directors recommend to the
Stockholders for approval at the Annual Meeting
the increase in authorized shares of the
Corporation's common stock to 50 million shares as
previously approved by the Directors.
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<PAGE>
3. That on September 25, 1996, at the Corporation's Annual
Meeting of Stockholders, the Amendment to the Corporation's
Certificate of Incorporation was duly adopted by the affirmative
vote of Stockholders of the Corporation holding a majority of the
shares of Common Stock, $.01 par value per share, of the
Corporation in accordance with the provisions of Section 242 of
the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, this Certificate of Amendment has been
executed on behalf of the undersigned corporation by its duly
authorized officer and attested to by its duly authorized
Secretary this 31st day of October, 1996.
THERMO REMEDIATION INC.
By:_______________________________
John P. Appleton
Chief Executive Officer
ATTEST:
By:__________________________
Sandra L. Lambert
Secretary
PAGE
<PAGE>
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER is made as of November 1,
1993, by and between THERMO REMEDIATION INC., a California
corporation (hereinafter sometimes called "TRI California"), and
THERMO REMEDIATION INC., a Delaware corporation (hereinafter
sometimes called "TRI Delaware") (TRI California and TRI Delaware
being herein sometimes collectively referred to as the
"Constituent Corporations").
The authorized capital stock of TRI California consists
of 1,500,000 shares of Capital Stock, par value $1.00 per share
(the "California Common Stock"), and the authorized capital stock
of TRI Delaware consists of 20,000,000 shares of Capital Stock,
par value $0.01 per share (the "Delaware Common Stock"). The
Directors of the Constituent Corporations deem it advisable and
to the advantage of said corporations that TRI California merge
with and into TRI Delaware in accordance with the following
terms, conditions and other provisions:
ARTICLE I
1.1 Merger. TRI California shall be merged with and
into TRI Delaware (the "Merger"), and TRI Delaware shall be the
surviving corporation, effective upon the date when this
Agreement is filed with the Secretaries of State of the States of
California and Delaware (the "Effective Date").
1.2 Effect of Merger. Upon the Effective Date, TRI
Delaware shall succeed to all of the rights, privileges, powers
and property of TRI California in the manner and as more fully
set forth in Section 259 of the General Corporation Law of the
State of Delaware.
1.3 Common Stock of TRI California. Upon the
Effective Date, by virtue of the Merger and without any action on
the part of the holder thereof, each share of California Common
Stock outstanding immediately prior thereto shall be converted
into four fully paid and non-assessable shares of Delaware Common
Stock.
1.4 Common Stock of TRI Delaware. Upon the Effective
Date, by virtue of the Merger and without any action on the part
of the holder thereof, each share of Delaware Common Stock
outstanding immediately prior thereto shall be canceled and
returned to the status of authorized but unissued shares.
1.5 Stock Certificates. On and after the Effective
Date, all of the outstanding certificates which prior to that
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<PAGE>
time represented shares of California Common Stock shall be
deemed for all purposes to evidence ownership of and to represent
the shares of TRI Delaware into which the shares of TRI
California represented by such certificates have been converted
as herein provided. The registered owner on the books and
records of TRI California of any such outstanding stock
certificate shall, until such certificate shall have been
surrendered for transfer or conversion or otherwise accounted for
to TRI Delaware or its transfer agent, have and be entitled to
exercise any voting and other rights with respect to and to
receive any dividend and other distributions upon the shares of
TRI Delaware evidenced by such outstanding certificate as above
provided.
ARTICLE II
2.1 Certificate of Incorporation and Bylaws. The
Certificate of Incorporation of TRI Delaware as in effect on the
Effective Date, shall continue to be the Certificate of
Incorporation of TRI Delaware as the surviving corporation
without change or amendment until further amended in accordance
with the provisions thereof and applicable law. The Bylaws of
TRI Delaware, as in effect on the Effective Date, shall continue
to be the Bylaws of TRI Delaware as the surviving corporation
without change or amendment until further amended in accordance
with the provisions thereof and applicable law.
2.2 Directors. The directors of TRI Delaware as of
the Effective Date shall continue to be the Directors of TRI
Delaware and such directors shall serve until the first meeting
of stockholders of TRI Delaware and until their successors are
elected and qualified.
2.3 Officers. The officers of TRI Delaware shall
remain officers of TRI Delaware on the effective date until their
successors are elected and qualified or their prior resignation,
removal or death.
ARTICLE III
3.1 Further Assurances. From time to time, as and
when required by TRI Delaware or by its successors and assigns,
there shall be executed and delivered on behalf of TRI California
such deeds and other instruments, and there shall be taken or
caused to be taken by it such further and other action, as shall
be appropriate or necessary in order to vest or perfect in or to
confirm of record or otherwise in TRI Delaware the title to and
possession of all the property, interests, assets, rights,
privileges, immunities, powers, franchises and authority of TRI
California, and otherwise to carry out the purposes of this
Agreement, and the officers and directors of TRI Delaware are
fully authorized in the name and on behalf of TRI California or
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otherwise to take any and all such action and to execute and
deliver any and all such deeds and other instruments.
3.2 Abandonment. At any time before the Effective
Date, this Agreement may be terminated and the Merger may be
abandoned by the Board of Directors of either TRI California or
TRI Delaware or both, notwithstanding approval of this Merger
Agreement by the shareholders of TRI California.
3.3 Counterparts. In order to facilitate the filing
and recording of this Merger Agreement, the same may be executed
in any number of counterparts, each of which shall be deemed to
be an original.
IN WITNESS WHEREOF, this Agreement, having first been
duly approved by the Board of Directors of TRI California and TRI
Delaware, is hereby executed on behalf of each of said
corporations by their respective officers thereunto duly
authorized.
THERMO REMEDIATION INC.,
a California corporation
By: James Lousararian
--------------------------
James Lousararian, Vice President
ATTEST: Sandra L. Lambert
---------------------------
Sandra L. Lambert, Secretary
THERMO REMEDIATION INC.,
a Delaware corporation
By: James Lousararian
---------------------------
James Lousararian, Vice President
ATTEST: Sandra L. Lambert
----------------------------
Sandra L. Lambert, Secretary
PAGE
<PAGE>
CERTIFICATE OF SECRETARY
OF
THERMO REMEDIATION INC.
(a Delaware corporation)
I, Sandra L. Lambert, the Secretary of Thermo
Remediation Inc., a Delaware corporation, hereby certify that the
Agreement of Merger to which this Certificate is attached, after
having been first duly signed on behalf of the corporation by the
Vice President and Secretary under the corporate seal of said
corporation, was duly approved and adopted by written consent of
the stockholders of Thermo Remediation Inc. on November 1, 1993,
by the holders of all of the outstanding stock entitled to vote
thereon.
WITNESS my hand and seal of said Thermo Remediation
Inc. this 1st day of November, 1993.
(SEAL)
Sandra L. Lambert
-----------------------------------
Sandra L. Lambert, Secretary
CERTIFICATE OF SECRETARY
OF
THERMO REMEDIATION INC.
(a California corporation)
I, Sandra L. Lambert, the Secretary of Thermo
Remediation Inc., a California corporation, hereby certify that
the Agreement of Merger to which this Certificate is attached,
after having been first duly signed on behalf of the corporation
by the Vice President and Secretary under the corporate seal of
said corporation, was duly approved and adopted by written
consent of the shareholders of Thermo Remediation Inc. on
November 1, 1993, by the holders of a majority of the outstanding
stock entitled to vote thereon.
WITNESS my hand and seal of said Thermo Remediation
Inc. this 1st day of November, 1993.
(SEAL)
Sandra L. Lambert
-----------------------------------
Sandra L. Lambert, Secretary
PAGE
<PAGE>
CERTIFICATE OF APPROVAL
OF
AGREEMENT OF MERGER
James Lousararian and Sandra L. Lambert certify that:
1. They are the Vice President and the Secretary,
respectively, of Thermo Remediation Inc., a
Delaware corporation.
2. The Agreement of Merger in the form attached was
duly approved by the board of directors and
shareholders of the corporation.
3. The shareholder approval was by the holders of
100% of the outstanding shares of the corporation.
4. There is only one class of shares and the number
of shares outstanding is 100.
5. The percentage vote required is more than 50%.
We further declare under penalty of perjury under the
laws of the State of California that the matters set forth in
this certificate are true and correct of our own knowledge.
DATE: November 1, 1993
James Lousararian
-----------------------------------
James Lousararian, Vice President
Sandra L. Lambert
-----------------------------------
Sandra L. Lambert, Secretary
PAGE
<PAGE>
CERTIFICATE OF APPROVAL
OF
AGREEMENT OF MERGER
James Lousararian and Sandra L. Lambert certify that:
1. They are the Vice President and the Secretary,
respectively, of Thermo Remediation Inc., a
California corporation.
2. The Agreement of Merger in the form attached was
duly approved by the board of directors and
shareholders of the corporation.
3. The shareholder approval was by the holders of 84%
of the outstanding shares of the corporation.
4. There is only one class of shares and the number
of shares outstanding is 1,350,953.
5. The percentage vote required is more than 50%.
We further declare under penalty of perjury under the
laws of the State of California that the matters set forth in
this certificate are true and correct of our own knowledge.
DATE: November 1, 1993
James Lousararian
-----------------------------------
James Lousararian, Vice President
Sandra L. Lambert
-----------------------------------
Sandra L. Lambert, Secretary
EXHIBIT 10
THERMO REMEDIATION INC.
STOCK HOLDINGS ASSISTANCE PLAN
SECTION 1. Purpose.
The purpose of this Plan is to benefit Thermo Remediation
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 Remediation 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 Remediation 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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<PAGE>
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.
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EXHIBIT A
THERMO REMEDIATION INC.
Promissory Note
$_________
Dated:____________
For value received, ________________, an individual whose
residence is located at _______________________ (the "Employee"),
hereby promises to pay to Thermo Remediation Inc. (the
"Company"), or assigns, ON DEMAND, but in any case on or before
[insert date which is the fifth anniversary of date of issuance]
(the "Maturity Date"), the principal sum of [loan amount in
words] ($_______), 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,
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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 REMEDIATION INC.
Computation of Earnings per Share
Three Months Ended Six Months Ended
----------------------- ----------------------
Sept. 28, Sept. 30, Sept. 28, Sept. 30,
1996 1995 1996 1995
----------------------------------------------------------------------------
Computation of Fully
Diluted Earnings per
Share:
Net Income $ 974,000 $ 1,330,000 $ 2,002,000 $ 2,510,000
Add: Convertible
debenture
interest, net of
tax 15,000 15,000 31,000 31,000
----------- ----------- ----------- -----------
Income applicable to
common stock assuming
full dilution (a) $ 989,000 $ 1,345,000 $ 2,033,000 $ 2,541,000
----------- ----------- ----------- -----------
Shares:
Weighted average
shares outstanding 12,893,588 12,314,224 12,863,281 12,229,815
Add: Shares issuable
from assumed
exercise
of options and
warrants (as
determined by
the application
of the treasury
stock method) 334,769 202,986 377,876 207,312
Shares issuable
from assumed
conversion of
subordinated
convertible
obligations 269,583 269,583 269,583 269,583
----------- ----------- ----------- ----------
Weighted average
shares outstanding,
as adjusted (b) 13,497,940 12,786,793 13,510,740 12,706,710
----------- ----------- ----------- -----------
Fully Diluted Earnings
per Share (a) / (b) $ .07 $ .11 $ .15 $ .20
=========== =========== =========== ===========
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
REMEDIATION 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> 6-MOS
<FISCAL-YEAR-END> MAR-29-1997
<PERIOD-END> SEP-28-1996
<CASH> 19,574
<SECURITIES> 9,111
<RECEIVABLES> 21,481
<ALLOWANCES> 814
<INVENTORY> 0
<CURRENT-ASSETS> 58,144
<PP&E> 55,790
<DEPRECIATION> 16,378
<TOTAL-ASSETS> 144,284
<CURRENT-LIABILITIES> 15,277
<BONDS> 38,003
0
0
<COMMON> 133
<OTHER-SE> 85,994
<TOTAL-LIABILITY-AND-EQUITY> 144,284
<SALES> 51,433
<TOTAL-REVENUES> 51,433
<CGS> 42,523
<TOTAL-COSTS> 42,523
<OTHER-EXPENSES> 557
<LOSS-PROVISION> 95
<INTEREST-EXPENSE> 1,094
<INCOME-PRETAX> 3,216
<INCOME-TAX> 1,214
<INCOME-CONTINUING> 2,002
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,002
<EPS-PRIMARY> .16
<EPS-DILUTED> .15
</TABLE>
