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 October 3, 1998.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
Commission File Number 1-12636
THERMORETEC CORPORATION
(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.)
Damonmill Square
9 Pond Lane, Suite 5A
Concord, Massachusetts 01742-2851
(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 October 30, 1998
---------------------------- -------------------------------
Common Stock, $.01 par value 13,167,398
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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
THERMORETEC CORPORATION
Consolidated Balance Sheet
(Unaudited)
Assets
October 3, April 4,
(In thousands) 1998 1998
- --------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents (includes $5,155 and
$8,000 under repurchase agreement with
affiliated company) $ 5,157 $ 8,912
Available-for-sale investments, at quoted market
value (amortized cost of $2,008) 2,006 2,003
Accounts receivable, less allowances of $1,709
and $1,690 35,432 30,529
Unbilled contract costs and fees 9,031 8,154
Prepaid and refundable income taxes 5,384 2,256
Prepaid expenses 1,999 2,257
Due from parent company and Thermo Electron - 667
-------- --------
59,009 54,778
-------- --------
Property, Plant, and Equipment, at Cost 51,689 57,040
Less: Accumulated depreciation and amortization 21,263 20,029
-------- --------
30,426 37,011
-------- --------
Other Assets 9,423 10,954
-------- --------
Cost in Excess of Net Assets of Acquired Companies 36,420 37,568
-------- --------
$135,278 $140,311
======== ========
2
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THERMORETEC CORPORATION
Consolidated Balance Sheet (continued)
(Unaudited)
Liabilities and Shareholders' Investment
October 3, April 4,
(In thousands except share amounts) 1998 1998
- --------------------------------------------------------------------------
Current Liabilities:
Accounts payable $ 8,949 $ 10,936
Accrued payroll and employee benefits 5,789 4,875
Deferred revenue 3,003 3,374
Billings in excess of revenues earned 1,060 1,277
Other accrued expenses (Note 4) 6,040 4,375
Due to parent company and Thermo Electron 233 -
-------- --------
25,074 24,837
-------- --------
Deferred Income Taxes 407 407
-------- --------
Long-term Obligations:
4 7/8% Subordinated convertible debentures
(includes $3,325 and $3,000 of related-party
debt) 37,950 37,950
3 7/8% Subordinated convertible note, due to
parent company 2,650 2,650
-------- --------
40,600 40,600
-------- --------
Shareholders' Investment:
Common stock, $.01 par value, 50,000,000 shares
authorized; 14,247,572 and 14,019,918 shares
issued 142 140
Capital in excess of par value 89,944 89,103
Accumulated deficit (11,782) (5,592)
Treasury stock at cost, 1,080,174 and 1,089,085
shares (9,106) (9,181)
Net unrealized loss on available-for-sale
investments (Note 3) (1) (3)
-------- --------
69,197 74,467
-------- --------
$135,278 $140,311
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
3
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THERMORETEC CORPORATION
Consolidated Statement of Operations
(Unaudited)
Three Months Ended
-------------------------
October 3, September 27,
(In thousands except per share amounts) 1998 1997
- --------------------------------------------------------------------------
Revenues $35,140 $33,639
------- -------
Costs and Operating Expenses:
Cost of revenues 29,507 28,365
Selling, general, and administrative
expenses 3,930 3,752
Restructuring costs (Note 4) 9,176 -
------- -------
42,613 32,117
------- -------
Operating Income (Loss) (7,473) 1,522
Interest Income 185 248
Interest Expense (includes $66 and $62 to
related parties) (542) (544)
Equity in Earnings of Unconsolidated
Subsidiary - 56
------- -------
Income (Loss) Before Income Taxes (7,830) 1,282
Income Tax (Provision) Benefit 2,507 (586)
------- -------
Net Income (Loss) $(5,323) $ 696
======= =======
Basic and Diluted Earnings (Loss) per
Share (Note 2) $ (.41) $ .06
======= =======
Weighted Average Shares (Note 2):
Basic 13,027 12,446
======= =======
Diluted 13,027 12,586
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
4
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THERMORETEC CORPORATION
Consolidated Statement of Operations
(Unaudited)
Six Months Ended
-------------------------
October 3, September 27,
(In thousands except per share amounts) 1998 1997
- --------------------------------------------------------------------------
Revenues $69,556 $61,843
------- -------
Costs and Operating Expenses:
Cost of revenues 58,379 52,198
Selling, general, and administrative
expenses 8,122 7,094
Restructuring costs (Note 4) 9,176 -
------- -------
75,677 59,292
------- -------
Operating Income (Loss) (6,121) 2,551
Interest Income 351 542
Interest Expense (includes $128 and $124 to
related parties) (1,083) (1,107)
Equity in Earnings of Unconsolidated
Subsidiary - 174
Other Income - 204
------- -------
Income (Loss) Before Income Taxes (6,853) 2,364
Income Tax (Provision) Benefit 2,018 (1,092)
------- -------
Net Income (Loss) $(4,835) $ 1,272
======= =======
Basic and Diluted Earnings (Loss) per
Share (Note 2) $ (.37) $ .10
======= =======
Weighted Average Shares (Note 2):
Basic 12,981 12,469
======= =======
Diluted 12,981 12,677
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
THERMORETEC CORPORATION
Consolidated Statement of Cash Flows
(Unaudited)
Six Months Ended
-------------------------
October 3, September 27,
(In thousands) 1998 1997
- --------------------------------------------------------------------------
Operating Activities:
Net income (loss) $ (4,835) $ 1,272
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Noncash restructuring costs (Note 4) 8,105 -
Depreciation and amortization 4,027 3,361
Equity in earnings of unconsolidated
subsidiary - (174)
Provision for losses on accounts
receivable 135 31
Other noncash items 116 (216)
Changes in current accounts, excluding
the effects of acquisitions:
Accounts receivable (5,663) (4,675)
Unbilled contract costs and fees (877) (5,880)
Other current assets (2,861) (597)
Accounts payable (1,587) 205
Other current liabilities (Note 4) 1,952 (1,406)
Due from parent company and Thermo
Electron 900 (594)
-------- --------
Net cash used in operating activities (588) (8,673)
-------- --------
Investing Activities:
Acquisitions, net of cash acquired (576) (2,289)
Purchases of property, plant, and equipment (2,330) (3,464)
Proceeds from sale of property, plant, and
equipment 185 268
Other (76) (575)
-------- --------
Net cash used in investing activities (2,797) (6,060)
-------- --------
Financing Activities:
Dividends paid (463) (354)
Repayment of long-term notes receivable 65 -
Net proceeds from issuance of Company common
stock 28 6
Repurchases of Company common stock - (2,472)
-------- --------
Net cash used in financing activities (370) (2,820)
-------- --------
Decrease in Cash and Cash Equivalents (3,755) (17,553)
Cash and Cash Equivalents at Beginning of
Period 8,912 18,600
-------- --------
Cash and Cash Equivalents at End of Period $ 5,157 $ 1,047
======== ========
6
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THERMORETEC CORPORATION
Consolidated Statement of Cash Flows (continued)
(Unaudited)
Six Months Ended
-------------------------
October 3, September 27,
(In thousands) 1998 1997
- --------------------------------------------------------------------------
Noncash Activities:
Fair value of assets of acquired companies $ 576 $ 6,289
Cash paid for acquired companies (576) (2,765)
Issuance of common stock for acquired
companies - (2,400)
-------- --------
Liabilities assumed of acquired companies $ - $ 1,124
======== ========
Dividends reinvested in Company common stock $ 892 $ 870
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
7
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Notes to Consolidated Financial Statements
1. General
The interim consolidated financial statements presented have been prepared
by ThermoRetec Corporation (the Company), formerly Thermo Remediation Inc.,
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 October 3, 1998, the results of operations for the three- and six-month
periods ended October 3, 1998, and September 27, 1997, and the cash flows for
the six-month periods ended October 3, 1998, and September 27, 1997. Interim
results are not necessarily indicative of results for a full year.
The consolidated balance sheet presented as of April 4, 1998, has been
derived from the consolidated financial statements that have been audited by the
Company's independent public accountants. Certain amounts in fiscal 1998 have
been reclassified to conform to the presentation in the fiscal 1999 financial
statements. 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 April 4, 1998, filed with the Securities and
Exchange Commission.
2. Earnings (Loss) per Share
Basic and diluted earnings (loss) per share were calculated as follows:
Three Months Ended Six Months Ended
------------------- -------------------
(In thousands except Oct. 3, Sept. 27, Oct. 3, Sept. 27,
per share amounts) 1998 1997 1998 1997
- --------------------------------------------------------------------------
Basic
Net Income (Loss) $(5,323) $ 696 $(4,835) $ 1,272
------- ------- ------- -------
Weighted Average Shares 13,027 12,446 12,981 12,469
------- ------- ------- -------
Basic Earnings (Loss) per
Share $ (.41) $ .06 $ (.37) $ .10
======= ======= ======= =======
Diluted
Net Income (Loss) $(5,323) $ 696 $(4,835) $ 1,272
------- ------- ------- -------
Weighted Average Shares 13,027 12,446 12,981 12,469
Effect of Stock Options - 140 - 208
------- ------- ------- -------
Weighted Average Shares,
as Adjusted 13,027 12,586 12,981 12,677
------- ------- ------- -------
Diluted Earnings (Loss)
per Share $ (.41) $ .06 $ (.37) $ .10
======= ======= ======= =======
8
<PAGE>
2. Earnings (Loss) per Share (continued)
The computation of diluted earnings per share excludes the effect of
assuming the exercise of certain outstanding stock options and warrants because
the effect would be antidilutive. As of October 3, 1998, there were 2,065,345
such options and warrants outstanding, with exercise prices ranging from $2.52
to $15.40 per share. In addition, the computation of diluted earnings per share
for all periods excludes the effect of assuming the conversion of $37,950,000
principal amount of 4 7/8% subordinated convertible debentures, convertible at
$17.92 per share, and $2,650,000 principal amount of a 3 7/8% subordinated
convertible note, convertible at $9.83 per share, because the effect would be
antidilutive.
3. Comprehensive Income
During the first quarter of fiscal 1999, the Company adopted Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income." This
pronouncement sets forth requirements for disclosure of the Company's
comprehensive income and accumulated other comprehensive items. In general,
comprehensive income combines net income and "other comprehensive items," which
represents unrealized, net of tax, losses from available-for-sale investments,
reported as a component of shareholders' investment in the accompanying balance
sheet. During the second quarter of fiscal 1999 and 1998, the Company had a
comprehensive loss of $5,318,000 and had comprehensive income of $693,000,
respectively. During the first six months of fiscal 1999 and 1998, the Company
had a comprehensive loss of $4,833,000 and had comprehensive income of
$1,268,000, respectively.
4. Restructuring Costs
During the second quarter of fiscal 1999, the Company recorded $9.2 million
of restructuring costs in connection with the closure of two soil-recycling
facilities. The costs include a write-down of fixed assets to their estimated
disposal value and a write-off of intangible assets, including cost in excess of
net assets of acquired companies, as well as other closure costs. Other accrued
expenses in the accompanying balance sheet as of October 3, 1998, include
$1,074,000 for closure costs related to the facilities, including severance and
lease costs.
5. Proposed Reorganization
On August 12, 1998, Thermo Electron Corporation announced a proposed
reorganization involving certain of Thermo Electron's subsidiaries, including
the Company. As part of this reorganization, Thermo Electron announced that the
Company may be taken private and become a wholly owned subsidiary of Thermo
TerraTech Inc. It is currently contemplated that the Company's shareholders
would receive shares of common stock of Thermo TerraTech in exchange for their
shares of the Company's common stock. The completion of this transaction is
subject to numerous conditions, including the establishment of prices or
exchange ratios; confirmation of anticipated tax consequences; the approval of
the Board of Directors of Thermo TerraTech; the negotiation and execution of a
definitive merger
9
<PAGE>
5. Proposed Reorganization (continued)
agreement; the receipt of a fairness opinion from an investment banking firm
that the transaction is fair to the Company's shareholders (other than Thermo
TerraTech and Thermo Electron) from a financial point of view; the approval of
the Company's Board of Directors, including its independent directors; and
clearance by the Securities and Exchange Commission of any necessary documents
regarding the proposed transaction.
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 "Forward-looking
Statements" in Exhibit 13 to the Company's Annual Report on Form 10-K for the
fiscal year ended April 4, 1998, filed with the Securities and Exchange
Commission.
Overview
The Company is a national provider of environmental-liability management
services. Through a nationwide network of offices, the Company offers these and
related consulting services in five areas: industrial remediation, nuclear
remediation, waste-fluids collection and recycling, soil remediation, and
environmental-management and information-technology systems.
The Company's industrial remediation businesses provide consultation,
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 and inorganic wastes and residues. In
May 1997, the Company's Remediation Technologies, Inc. (RETEC) subsidiary
acquired TriTechnics Corporation, an environmental engineering and consulting
firm. The Company's IEM Sealand subsidiary performs the cleanup of hazardous
waste sites for government and industry as a prime construction contractor and
completes predesigned remedial action contracts at sites containing hazardous,
toxic, and radioactive wastes.
Through its RPM Systems, Inc. subsidiary, acquired in August 1997, the
Company develops and implements management and computer-based systems that aid
in the collection and application of environmental data, helping to establish or
improve a customer's environmental-compliance program while controlling the
related costs.
10
<PAGE>
Overview (continued)
The Company provides nuclear-remediation services to remove radioactive
contaminants from sand, gravel, and soil, as well as health physics services,
radiochemistry laboratory services, radiation dosimetry services,
radiation-instrument calibration and repair services, and radiation-source
production. In November 1997, the Company acquired Benchmark Environmental
Corporation, a provider of nuclear-remediation and waste-management services to
government and private sector clients.
The Company also collects, tests, processes, and recycles used motor oil and
other industrial fluids in certain western states (Oregon, Idaho, Nevada, Utah,
Colorado, New Mexico, and Arizona).
Through its TPS Technologies division, the Company designs and operates
facilities for the remediation of nonhazardous soil and mobile equipment for the
on-site remediation of such wastes. The Company's soil-remediation centers are
environmentally secure facilities for receiving, storing, and processing
petroleum-contaminated soils.
The Company's businesses are affected by several factors, particularly
regulation and enforcement of remediation activities, extreme weather
variations, economic cycles, the availability of federal and state funding for
environmental cleanup, and local competition.
The Company has acquired a number of businesses in the last three years. The
Company does not presently intend to actively seek to make additional
acquisitions in the near future, and expects instead to concentrate its
resources on strengthening its core businesses. The Company may, however,
acquire one or more complementary businesses if they are presented to the
Company on terms the Company believes to be attractive.
Results of Operations
Second Quarter Fiscal 1999 Compared With Second Quarter Fiscal 1998
Revenues increased to $35,140,000 in the second quarter of fiscal 1999 from
$33,639,000 in the second quarter of fiscal 1998. Industrial remediation
revenues increased due to higher revenues from consulting and engineering
services at RETEC and, to a lesser extent, the inclusion of $314,000 in revenues
from an acquired company. These increases were more than offset by a $5,496,000
decrease in revenues resulting from a decline in the number of contracts in
process at IEM Sealand. Revenues from nuclear services increased primarily due
to the inclusion of $2,202,000 in revenues from an acquired business. Revenues
from fluids-recycling services increased $877,000, primarily due to increased
capacity as a result of geographical expansion. Revenues from soil-remediation
services increased $1,095,000 in the second quarter of fiscal 1999, resulting
from higher volumes of soil processed. The Company believes that the recent
strength in the soil-remediation market is due in part to compliance with a
December 1998 Environmental Protection Agency deadline for modifying underground
storage tanks. Although the Company expects this market to remain viable for
some time after December 1998, this source of business is expected to wane in
future years, and the Company believes it will be required to reposition this
business over time.
11
<PAGE>
Second Quarter Fiscal 1999 Compared With Second Quarter Fiscal 1998
(continued)
The gross profit margin was 16.0% in the second quarter of fiscal 1999,
compared with 15.7% in the second quarter of fiscal 1998. The gross profit
margin increased slightly due to higher volumes of soil processed and, to a
lesser extent, higher margins at acquired companies. These increases were offset
in part by lower margins on certain remedial-construction contracts at IEM
Sealand.
Selling, general, and administrative expenses as a percentage of revenues
remained unchanged at 11.2% in the second quarter of fiscal 1999 and fiscal
1998.
During the second quarter of fiscal 1999, the Company recorded $9.2 million
of restructuring costs in connection with the closure of two soil-recycling
facilities. The costs include a write-down of fixed assets to their estimated
disposal value and a write-off of intangible assets, including costs in excess
of net assets of acquired companies, as well as other closure costs (Note 4).
The closure was in response to changes in market conditions, which resulted in
lower priced disposal alternatives. These facilities reported revenues and
operating losses of $2,211,000 and $788,000, respectively, in fiscal 1998 and
revenues and operating losses before the restructuring charge of $1,846,000 and
$119,000, respectively, in the first six months of fiscal 1999.
Interest income decreased to $185,000 in the second quarter of fiscal 1999
from $248,000 in the second quarter of fiscal 1998 as a result of lower average
invested balances.
Equity in earnings of unconsolidated subsidiary in fiscal 1998 represents
the Company's proportionate share of income from a joint venture that was sold
in fiscal 1998.
The Company recorded a tax benefit in the second quarter of fiscal 1999 at
an effective rate below the statutory federal income tax rate, primarily due to
the relative impact of the write-off of nondeductible costs in excess of net
assets of acquired companies. The effective tax rate in the second quarter of
fiscal 1998 was 46%. This rate exceeded the statutory federal income tax rate
primarily due to the impact of state income taxes and nondeductible amortization
of cost in excess of net assets of acquired companies.
In July 1998, the Company filed suit against a customer, seeking payment of
$2.6 million that has been billed under a contract to provide remediation
services. The customer has disputed its obligation to pay the Company. While the
Company generally maintains reserves for these types of matters, failure to
collect this receivable would have a material adverse impact on the Company's
future results of operations.
12
<PAGE>
First Six Months Fiscal 1999 Compared With First Six Months Fiscal 1998
Revenues in the first six months of fiscal 1999 increased 12% to $69,556,000
from $61,843,000 in the first six months of fiscal 1998. Industrial remediation
revenues increased due to higher revenues from consulting and engineering
services at RETEC and, to a lesser extent, the inclusion of $1,046,000 in
revenues from an acquired company. These increases were more than offset by a
$9,675,000 decrease in revenues resulting from a decline in the number of
contracts in process at IEM Sealand. Revenues from nuclear services increased
primarily due to the inclusion of $4,134,000 in revenues from an acquired
business. Revenues from fluids-recycling services increased $1,756,000,
primarily due to increased capacity as a result of geographical expansion.
Revenues from soil-remediation services increased $2,904,000 in fiscal 1999,
resulting from higher volumes of soil processed.
The gross profit margin was 16.1% in the first six months of fiscal 1999,
compared with 15.6% in the first six months of fiscal 1998. The gross profit
margin increased due to the reasons discussed in the results for the second
quarter.
Selling, general, and administrative expenses as a percentage of revenues
remained relatively unchanged at 11.7% in the first six months of fiscal 1999
and 11.5% in the first six months of fiscal 1998.
During the second quarter of fiscal 1999, the Company recorded $9.2 million
of restructuring costs in connection with the closure of two soil-recycling
facilities (Note 4).
Interest income decreased to $351,000 in the first six months of fiscal 1999
from $542,000 in the first six months of fiscal 1998 as a result of lower
average invested balances.
Equity in earnings of unconsolidated subsidiary in fiscal 1998 represents
the Company's proportionate share of income from a joint venture that was sold
in fiscal 1998.
The Company recorded a tax benefit in the first six months of fiscal 1999 at
an effective rate below the statutory federal income tax rate primarily due to
the relative impact of the write-off of nondeductible costs in excess of net
assets of acquired companies. The effective tax rate was 46% in the first six
months of fiscal 1998. This rate exceeded the statutory federal income tax rate
primarily due to the impact of state income taxes and nondeductible amortization
of cost in excess of net assets of acquired companies.
13
<PAGE>
Liquidity and Capital Resources
Consolidated working capital, including cash, cash equivalents, and
available-for-sale investments, was $33,935,000 at October 3, 1998, compared
with $29,941,000 at April 4, 1998. Cash, cash equivalents, and
available-for-sale investments were $7,163,000 at October 3, 1998, compared with
$10,915,000 at April 4, 1998. During the first six months of fiscal 1999, the
Company used $588,000 of cash for operating activities. The Company used cash to
fund an increase in accounts receivable of $5,663,000, primarily as a result of
a large remedial-construction contract and a slowing of collections. The Company
expects to increase collection efforts over the remainder of fiscal 1999. Cash
of $2,861,000 was used to fund an increase in other current assets, primarily
prepaid and refundable income taxes.
The Company's investing activities used $2,797,000 of cash during the first
six months of fiscal 1999. The Company expended $2,330,000 for purchases of
property, plant, and equipment and plans to make capital expenditures of
approximately $2,900,000 during the remainder of fiscal 1999. In August 1998,
the Company, through its Thermo Fluids subsidiary, acquired substantially all of
the assets of Genesis Petroleum Corporation (Genesis) for $576,000 in cash.
Genesis provides oil collections and oil re-refinery services.
During the first six months of fiscal 1999, the Company's financing
activities used $370,000 of cash. On September 1, 1998, the Company paid a
semiannual cash dividend of $0.10 per share of common stock to shareholders of
record as of August 18, 1998. The Company paid $463,000 in connection with this
dividend. The amount of cash dividends ultimately 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 July 1998, of up to $15,000,000 of its own securities.
Through October 3, 1998, the Company had expended $11,372,000 under this
authorization, none of which was expended during fiscal 1999. All such purchases
are funded from working capital.
Although the Company does not presently intend to actively seek to acquire
additional businesses in the near future, it may acquire one or more
complementary businesses if they are presented to the Company on terms the
Company believes to be attractive. Such acquisitions may require significant
amounts of cash. In addition, $37,950,000 of the Company's 4 7/8% convertible
debentures mature on May 1, 2000. The Company expects that it will finance any
such acquisitions and the redemption of such debentures through a combination of
internal funds and/or short-term borrowings from Thermo TerraTech Inc. or Thermo
Electron Corporation, although it has no agreement with these companies to
ensure that funds will be available on acceptable terms, or at all.
14
<PAGE>
Year 2000
The Company continues to assess the potential impact of the year 2000 on the
Company's internal business systems, products, and operations. The Company's
year 2000 initiatives include (i) testing and upgrading internal business
systems and facilities; (ii) testing and developing necessary upgrades for the
Company's current products and certain discontinued products; (iii) contacting
key suppliers, vendors, and customers to determine their year 2000 compliance
status; and (iv) developing contingency plans.
The Company's State of Readiness
The Company has tested and evaluated its critical information- technology
systems for year 2000 compliance, including its significant computer systems,
software applications, and related equipment. The Company is currently in the
process of upgrading or replacing its noncompliant systems. In most cases, such
upgrades or replacements are being made in the ordinary course of business. The
Company expects that all of its material information-technology systems will be
year 2000 compliant by the end of 1999. The Company is also evaluating the
potential year 2000 impact on its facilities, including its buildings and
utility systems. Any problems that are identified will be prioritized and
remediated based on their assigned priority. The Company will continue periodic
testing of its critical internal business systems and facilities in an effort to
minimize operating disruptions due to year 2000 issues.
The Company is in the process of identifying and contacting suppliers,
vendors, and customers that are believed to be significant to the Company's
business operations in order to assess their year 2000 readiness. As part of
this effort, the Company has developed and is distributing questionnaires
relating to year 2000 compliance to its significant suppliers, vendors, and
customers. The Company intends to follow-up and monitor the year 2000 compliant
progress of significant suppliers, vendors, and customers that indicate that
they are not year 2000 compliant or that do not respond to the Company's
questionnaires.
Contingency Plans
The Company intends to develop a contingency plan that will allow its
primary business operations to continue despite disruptions due to year 2000
problems. These plans may include identifying and securing other suppliers and
modifying production facilities and schedules. As the Company continues to
evaluate the year 2000 readiness of its business systems and facilities,
significant suppliers, vendors, and customers, it will modify and adjust its
contingency plan as may be required.
Costs to Address the Company's Year 2000 Issues
To date, costs incurred in connection with the year 2000 issue have not been
material. The Company does not expect total year 2000 remediation costs to be
material, but there can be no assurance that the
15
<PAGE>
Year 2000 (continued)
Company will not encounter unexpected costs or delays in achieving year 2000
compliance.
Risks of the Company's Year 2000 Issues
While the Company is attempting to minimize any negative consequences
arising from the year 2000 issue, there can be no assurance that year 2000
problems will not have a material adverse impact on the Company's business,
operations, or financial condition. While the Company expects that upgrades to
its internal business systems will be completed in a timely fashion, there can
be no assurance that the Company will not encounter unexpected costs or delays.
Some services provided by the Company may involve the delivery to clients of
third-party software and hardware. Accordingly, the Company may see an increase
in warranty and other claims related to Company services that incorporate such
software or hardware. In addition, certain older third-party products, which the
Company no longer uses in providing its services to clients, may not be year
2000 compliant, which may expose the Company to claims. If any of the Company's
material suppliers, vendors, or customers experience business disruptions due to
year 2000 issues, the Company might also be materially adversely affected. The
Company's research and development, production, distribution, financial,
administrative, and communications operations might be disrupted. There is
expected to be a significant amount of litigation relating to the year 2000
issue and there can be no assurance that the Company will not incur material
costs in defending or bringing lawsuits. Any unexpected costs or delays arising
from the year 2000 issue could have a significant adverse impact on the
Company's business, operations, and financial condition.
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holder
On September 15, 1998, at the Annual Meeting of Shareholders, the
shareholders elected seven incumbent directors to a one-year term expiring
in 1999. The Directors elected at the meeting were: Dr. John P. Appleton,
Dr. Robert W. Dunlap, Dr. Elias P. Gyftopoulos, Mr. Fred Holubow, Mr. Theo
Melas-Kyriazi, Dr. Frank E. Morris, and Mr. William A. Rainville. Dr. John
P. Appleton, Dr. Robert W. Dunlap, Mr. Fred Holubow and Mr. Theo
Melas-Kyriazi each received 12,668,474 shares voted in favor of his
election and 16,633 shares voted against. Dr. Elias P. Gyftopoulos and Mr.
Frank E. Morris each received 12,668,380 shares voted in favor of his
election and 16,727 shares voted against. Mr. William A. Rainville
received 12,667,724 shares voted in favor of his election and 17,383
shares voted against. No abstentions or broker nonvotes were recorded on
the election of directors.
16
<PAGE>
Item 4 - Submission of Matters to a Vote of Security Holder (continued)
At the Annual Meeting, the shareholders also approved a proposal to amend
the Company's Certificate of Incorporation to change the name of the Corporation
to ThermoRetec Corporation: 12,675,531 shares voted in favor of the proposal,
4,096 shares voted against the proposal, and 5,480 shares abstained. No broker
nonvotes were recorded on the proposal.
Item 6 - Exhibits
(a) Exhibits
See Exhibit Index on the page immediately preceding exhibits.
(b) Reports on Form 8-K
On August 13, 1998, the Company filed a Current Report on Form 8-K dated
August 12, 1998, with respect to a proposed corporate reorganization by the
Company's ultimate parent corporation, Thermo Electron Corporation, involving
certain of Thermo Electron's subsidiaries, including the Company.
On September 29, 1998, the Company filed a Current Report on Form 8-K dated
September 29, 1998, with respect to restructuring and other charges recorded
during the second quarter of fiscal 1999.
17
<PAGE>
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 6th day of November 1998.
THERMORETEC CORPORATION
Paul F. Kelleher
---------------------------
Paul F. Kelleher
Chief Accounting Officer
John N. Hatsopoulos
---------------------------
John N. Hatsopoulos
Chief Financial Officer and
Senior Vice President
18
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ------------------------------------------------------------------------------
3 Certificate of Incorporation, as amended, of the Registrant.
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:
<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 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 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.
/s/ Barbara J. Lucas
Barbara J. Lucas
<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 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 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: /s/ James Lousararian
------------------------------------
James Lousararian, Vice President
ATTEST: /s/ Sandra L.Lambert
------------------------------------
Sandra L. Lambert, Secretary
THERMO REMEDIATION INC.,
a Delaware corporation
By: /s/ James Lousararian
------------------------------------
James Lousararian, Vice President
ATTEST: /s/ Sandra L.Lambert
------------------------------------
Sandra L. Lambert, Secretary
<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
/s/ James Lousararian
----------------------------------
James Lousararian, Vice President
/s/ Sandra L.Lambert
----------------------------------
Sandra L. Lambert, Secretary
<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
/s/ James Lousararian
----------------------------------
James Lousararian, Vice President
/s/ Sandra L.Lambert
----------------------------------
Sandra L. Lambert, Secretary
<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) /s/ 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) /s/ Sandra L. Lambert
----------------------------------
Sandra L. Lambert, Secretary
<PAGE>
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, $.01 par value per share, from 20 million shares to 50 million
shares and that such amendment is hereby effected by deleting said
Article in its entirety and inserting the following in substitution
therefor:
"FOURTH: The total number of shares of capital
stock which the Corporation shall have authority to
issue is:
Fifty Million (50,000,000) shares, and the par
value of each share is One Cent ($.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:
RESOVLED, 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.
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 the
Stockholders of the Corporation holding a majority
of the shares of the 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: /s/ John P. Appleton
John P. Appleton
Chief Executive Officer
ATTEST:
By: /s/ Sandra L. Lambert
Sandra L. Lambert, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Thermo Remediation Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of Thermo Remediation
Inc., a resolution was duly adopted setting forth a proposed amendment to the
Certificate of Incorporation of said corporation declaring advisable the
following amendment to the Certificate of Incorporation of said corporation:
That the First Article of the Certificate of Incorporation of Thermo
Remediation Inc. be amended to change the name of the Corporation to
ThermoRetec Corporation and that such amendment is hereby effected by
deleting said Article in its entirety and inserting the following in
substitution therefor:
FIRST: The name of the Corporation is:
ThermoRetec Corporation
SECOND: That on September 15, 1998, 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.
THIRD: That the aforesaid amendment was duly adopted in accordance with the
applicable provisions of Sections 242 and 228 of the General Corporation Law of
the State of Delaware.
IN WITNESS WHEREOF, said Thermo Remediation Inc. has caused this certificate
to be signed by Sandra L. Lambert, its Secretary, this 15th day of September,
1998.
Thermo Remediation Inc.
By /s/ Sandra L.Lambert
Sandra L. Lambert, Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMORETEC
CORPORATION'S REPORT ON FORM 10-Q FOR THE PERIOD ENDED OCTOBER 3,1998 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> APR-03-1999
<PERIOD-END> OCT-03-1998
<CASH> 5,157
<SECURITIES> 2,006
<RECEIVABLES> 37,141
<ALLOWANCES> 1,709
<INVENTORY> 0
<CURRENT-ASSETS> 59,009
<PP&E> 51,689
<DEPRECIATION> 21,263
<TOTAL-ASSETS> 135,278
<CURRENT-LIABILITIES> 25,074
<BONDS> 34,625
0
0
<COMMON> 142
<OTHER-SE> 69,055
<TOTAL-LIABILITY-AND-EQUITY> 135,278
<SALES> 0
<TOTAL-REVENUES> 69,556
<CGS> 0
<TOTAL-COSTS> 58,379
<OTHER-EXPENSES> 9,176
<LOSS-PROVISION> 135
<INTEREST-EXPENSE> 1,083
<INCOME-PRETAX> (6,853)
<INCOME-TAX> (2,018)
<INCOME-CONTINUING> (4,835)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,835)
<EPS-PRIMARY> (0.37)
<EPS-DILUTED> (0.37)
</TABLE>
